Accusations of “abuse of power” directed at the regulatory authority by 18 states. Trump promises a leadership change at the agency.
Eighteen U.S. states have filed a lawsuit against the SEC and its chairman, Gary Gensler, accusing the regulatory authority of overstepping its regulatory boundaries in the digital asset sector.
The coalition of states, led by Nebraska, Tennessee, and Wyoming, and including Texas, Kentucky, and Ohio, challenges the SEC’s regulatory approach, calling it a “blatant abuse of government power.” According to the lawsuit, the agency has attempted to “unilaterally seize regulatory authority from the states through a continuous series of legal actions.”
Regarding the lawsuit, Russell Coleman, the attorney general of Kentucky, stated:
“Instead of encouraging this vibrant new digital industry, the Biden-Harris Administration is unlawfully cracking down on cryptocurrency.”
According to data from the Blockchain Association, since 2021, crypto companies have spent $429 million in legal fees to deal with the SEC’s actions.
However, the situation may change in the coming months. Elected president Donald Trump has announced his intention to remove Gensler from office, with the prospect of appointing a new chairman more favorable to the sector. Among the possible successors are Mark Uyeda, the current SEC commissioner and a critic of Gensler’s approach, and Dan Gallagher, a former SEC commissioner from 2011 to 2015 and current executive at Robinhood.
Despite increasing pressure and the possibility of removal in January 2025, Gensler maintains his critical stance towards the digital asset sector. In a recent speech at the Practicing Law Institute, the SEC chairman reiterated that “the crypto sector has caused significant harm to investors” and that “most digital assets have yet to demonstrate sustainable use cases beyond speculation and potential illicit activities.”
