Texas and 18 States Sue Biden and SEC Over “Illegal Regulations” of Cryptocurrencies
- Coalition of 18 states sues SEC over cryptocurrency regulations.
- Lawsuit challenges SEC’s authority over digital assets.
- States argue that federal regulations threaten cryptocurrency innovation.
Texas Attorney General Ken Paxton, along with a coalition of 18 states, filed a lawsuit judicial against the U.S. Securities and Exchange Commission (SEC) and members of the Biden-Harris administration. The central charge is that the SEC has imposed sweeping regulations on cryptocurrencies without proper legal authority.
According to a statement from the Texas Attorney General’s office, the SEC’s new rules require digital asset platforms to register as securities exchanges, broker-dealers and clearinghouses. The lawsuit argues that these requirements impose compliance with federal securities laws on platforms that are not clearly covered by the existing legal text.
The SEC, for its part, maintains that such regulations are authorized by the Securities Act of 1933 and the Exchange Act of 1934. However, the lawsuit disputes that position, stating that the nearly century-old laws cited by the SEC were not designed to address digital assets like cryptocurrencies.
The statement further highlights that the SEC’s regulatory actions exceed its statutory authority and violate the Administrative Procedure Act. “Federal bureaucrats in Washington do not have the authority to dictate to states how they should interact with cryptocurrencies, nor do they have the power to stifle this new field with a regulatory framework that Congress never intended,” Attorney General Paxton said.
The coalition of states argues that staking activities do not meet the criteria set forth in the Howey Test, the legal framework used to determine whether an asset is considered a security. In addition, the lawsuit claims that penalties and restrictions imposed on cryptocurrency platforms, without a clear regulatory framework, create “substantial risks” to one of the country’s fastest-growing economic sectors, violating states’ rights to regulate their own economies.
The lawsuit reflects growing tensions between state and federal authorities over cryptocurrency regulation in the United States. While the SEC is seeking to apply existing laws to the emerging digital asset market, states like Texas argue that such measures overstep federal authority and threaten innovation and economic growth in their jurisdictions.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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