These states have come together to file a lawsuit against the U.S. Securities and Exchange Commission (SEC) and its chief, Gary Gensler.
They say the SEC has gone too far with its rules, trying to control the crypto industry in ways they believe are unfair and beyond its power.
What Is the SEC?
The SEC is a government agency in charge of making sure the stock market and other types of investments are safe and fair. But in recent years, the SEC has turned its attention to cryptocurrencies. As more people and companies get involved with crypto, the SEC has stepped up its efforts to regulate, or make rules, for the industry. However, not everyone thinks the SEC’s actions are fair.
So, the attorneys general from these 18 states—who act as the top legal officers in their states—say the SEC is overstepping its boundaries by trying to control crypto too tightly. They accuse the SEC of “government overreach,” which means the agency is doing more than it’s supposed to do. They argue that Gary Gensler, the SEC’s leader, is leading a “regulation by enforcement” campaign. This means the SEC is not just setting rules for everyone to follow, but instead, is taking companies to court or making new rules in response to specific situations, which the states feel is unfair.
🚨SCOOP: 18 U.S. states have filed to sue the @SECGov and its commissioners, accusing them of unconstitutional overreach and unfair persecution of the #crypto industry under the leadership of agency chief @GaryGensler .
The lawsuit, signed by 18 Republican Attorneys General,… pic.twitter.com/wxOovuIRQH
— Eleanor Terrett (@EleanorTerrett) November 14, 2024
The lawsuit claims that the SEC’s aggressive actions are stomping on states’ rights. Each state has the right to make its own rules about how businesses and investments work in its economy. The states argue that the SEC’s strict crypto rules are making it hard for them to do this.
The Stakes Are High
The cryptocurrency industry is huge—it’s worth about $3 trillion. Many people believe that crypto could be an important part of the future of money, allowing for faster and more secure transactions. The 18 states suing the SEC think that if the SEC is too strict, it could scare away crypto businesses and cost the economy jobs and growth. They say the SEC should “stay in its lane” and let the states decide how to handle crypto within their borders.
These comments in lawsuit filed by 18 states vs SEC…
“SEC’s regulatory overreach defies basic principles of federalism & separation of powers.”
“By attempting to shoehorn digital assets into ill-fitting federal securities laws & inapt disclosure regimes…”
via @EleanorTerrett pic.twitter.com/IxXpXCcXOv
— Nate Geraci (@NateGeraci) November 15, 2024
This case is still at the starting line, and it may take a while before we know the outcome. But with 18 states standing up to a major federal agency, the lawsuit shows how serious they are about protecting their rights and supporting crypto. The states believe that just like any other industry, the crypto world should get a fair shake. They argue that the SEC’s current actions are more about control than protection.
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