A group of states, led by Iowa Attorney General Brenna Bird, have filed an amicus brief questioning the SEC’s (Securities and Exchange Commission) power to control the cryptocurrency market.
Arkansas, Indiana, Kansas, Montana, Nebraska, and Oklahoma all signed on to the brief, which says the SEC is too strict and blocking new ideas.
Attorney General Bird said this about the SEC’s approach to regulation: “The Biden SEC is trying to stop states like Iowa from doing their job to hold thieves accountable and protect families from the dangers of cryptocurrency scams.”
Cryptocurrency Regulation Lacks Authorization
The coalition says the SEC’s moves go against constitutional principles like federalism and the Major Questions Doctrine. They say that the SEC doesn’t have the explicit permission from Congress to regulate a multi-trillion-dollar business like cryptocurrency.
“The SEC’s attempt to regulate cryptocurrencies without proper congressional authorization is a direct threat to state authority and consumer safety,” it says.The coalition also says that the SEC’s way of regulating, which rests on legal frameworks rather than enforcement actions, is against the Administrative Procedure Act (APA).
They used the SEC’s case against SafeMoon LLC as an example of going too far and warned that putting tokens into groups based on how their prices change could mean that the SEC would have to regulate any good whose value changes.
Bird said, “The Biden SEC is attempting to abuse its power and put itself in charge of regulating cryptocurrency, bypassing state consumer-protection laws.” The brief says that most cryptocurrencies don’t pass the Supreme Court’s Howey test for securities, which says that investors must put money into a shared business that makes funds from other people’s work.
The SEC hasn’t replied to the report yet. In February 2024, Bird and other states said that the SEC went beyond what it could do in its case against Kraken. They asked the court to throw out the SEC’s securities claims.
“The court shouldn’t rule that crypto assets are securities if they don’t come with an investment contract.” “When the SEC uses this unrestricted power, it puts state consumers at risk by overriding state laws that are better suited to the risks of non-security products,” the joint statement said.
