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State Attorneys General Sue SEC Over Crypto Regulation
Legal Action Against SEC’s Crypto Enforcement
A coalition of state attorneys general and the DeFi Education Fund has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) and its commissioners. The lawsuit alleges that the SEC is overreaching in its enforcement actions against cryptocurrency exchanges.
Challenging SEC’s Regulatory Jurisdiction
The legal action, filed in the U.S. District Court for the Eastern District of Kentucky, aims to restrain the SEC from pursuing enforcement actions. It argues that the SEC’s approach to crypto regulation is unlawful and violates the Administrative Procedures Act. The lawsuit contends that digital assets should not be classified as investment contracts under federal securities laws.
Criticism of SEC’s Crypto Policy
The lawsuit highlights concerns about the SEC’s regulatory stance on cryptocurrencies and its impact on states’ authority to regulate the industry independently. It references the major questions doctrine, arguing that the SEC is overstepping its mandate by litigating issues not within its purview.
Industry Reaction and SEC’s Response
The CEO of the DeFi Education Fund expressed concerns about the SEC’s regulatory overreach, stating that it hinders innovation in the financial industry. An SEC spokesperson declined to comment on the litigation but acknowledged the collaboration with state securities regulators in addressing misconduct in crypto markets.
SEC’s Stance on Crypto
Earlier statements from SEC Chair Gary Gensler highlighted the agency’s ongoing approach to crypto regulation, emphasizing the need to protect investors from potential harm. Gensler underscored the speculative nature of crypto investments and the limited proven use cases for most crypto assets.
State Attorney General’s Perspective
Kentucky Attorney General Russell Coleman criticized the Biden administration for stifling crypto innovation and impeding financial freedom. He emphasized the growing interest in cryptocurrencies among Kentuckians and the need to protect individuals from inflation.
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