The states accuse the securities regulator of overstepping its authority on cryptocurrency
A total of 18 US states, including Texas, Ohio, and Kentucky, have launched a lawsuit against the Securities and Exchange Commission (SEC) and its chair, Gary Gensler, accusing the agency of overstepping its authority in its regulation of the cryptocurrency industry. The states argue that the SEC’s enforcement actions sidestep Congress and infringe upon states’ rights to oversee financial activities. This legal battle highlights growing dissatisfaction with the SEC’s approach, which critics say has stifled innovation and created uncertainty for crypto developers.
Since 2021, crypto companies have spent over $426 million defending themselves against SEC actions. Industry leaders claim the lack of clear policies is the biggest challenge for cryptocurrency growth in the US. This lawsuit reflects a broader pushback against what many see as excessive federal control over a rapidly evolving industry.
The timing of the lawsuit coincides with speculation about potential changes in SEC leadership. Now that Donald Trump is returning to office in 2025, names like SEC Commissioner Mark Uyeda and former commissioner Dan Gallagher could be discussed as possible successors to Gensler. Uyeda has publicly criticized Gensler’s enforcement-heavy strategy, describing it as harmful to the industry.
Despite the criticism, Gensler continues to defend his regulatory stance. In a recent speech, he highlighted concerns over the speculative nature of most crypto assets, their association with illicit activities, and their lack of sustainable use cases. This legal challenge and ongoing debates signal a critical moment for the US cryptocurrency landscape, with potential implications for the industry’s future direction and investor confidence.
