Utah Attorney General Sean Reyes is leading a coalition of 18 states to challenge the Securities Exchange Commission’s (SEC) attempt to regulate cryptocurrencies with policies that may contradict state crypto statutes.
In a filing with the United States District Court for the Eastern District of Kentucky Frankfort Division, Reyes and the coalition of state AGs have levied several charges against the SEC. Among them, they say the SEC is overstepping its constitutional authority, acting without Congressional consent, abusively targeting the crypto industry, and preventing states like Utah from exercising sovereign power to enforce more effective laws that encourage innovation and protect consumers.
“The SEC is drastically and illegally overstepping its limited authority by enforcing out-of-date legal theories in a desperate attempt to suppress the trillion-dollar digital asset industry,” Reyes said. “The desire to prevent misuse of crypto is understandable. But there are ways to do that constitutionally. There are approaches states like Utah have taken to balance blockchain growth and safeguards. The SEC’s attempt to regulate most digital assets into oblivion is wholly improper.”
Reyes has long been an advocate for balanced and careful policies that foster innovation, including in the blockchain arena. He has been a vocal leader nationally and among his AG colleagues for allowing states to find the proper balance of empowering growth and protections in the crypto space.
“Utah has been a beacon of innovation and home to many crypto leaders. Utahns of diverse backgrounds have found financial freedom and asset protection through digital currency. Instead of encouraging this vibrant new digital industry, the current administration is unlawfully cracking down on cryptocurrency to the detriment of our liberty and economic prosperity,” Reyes added. “SEC Chair Gensler points to court decisions he says validate his agency’s regulation of securities. But he’s missing the whole point. If these digital assets are not securities to begin with, he has no enforcement authority.”
More specifically, the states argue that the federal government’s approach to regulation of blockchain technology is unconstitutional and unlawful for several reasons. The coalition highlights that the digital assets within this industry are not investment contracts, that Congress never empowered the SEC to regulate these platforms, that the SEC has not issued a legally binding rule for its efforts to regulate through the proper process, and that the federal government does not have the authority to usurp the states’ control over these matters.
Joining Utah and Kentucky on the complaint are the States of Nebraska, Tennessee, West Virginia, Iowa, Texas, Mississippi, Montana, Arkansas, Ohio, Kansas, Missouri, Indiana, Louisiana, South Carolina, Oklahoma, and Florida. In addition, DeFi Education Fund also signed on to the filing.
It should be noted that while the filing is on behalf of the State of Utah, the Attorney General’s Office does not represent the Utah Division of Securities, which administers civil securities regulation and enforcement under state law.