Iowa Attorney General Brenna Bird filed an amicus brief opposing the U.S. Securities and Exchange Commission’s (SEC) efforts to regulate cryptocurrencies, reports published at The beginning of September from the Office of Iowa based in CA. Signed by the seven states of Arkansas, Indiana, Kansas, Montana, Nebraska, and Oklahoma, this coalition filed their brief on July 10 to challenge the SEC’s regulatory reach. The WSBC claims the SEC’s actions are a “power grab” that may inhibit states’ ability to protect their residents from fraudulent cryptocurrency activities and interfere with free markets. This shows how the SEC could clamp down on cryptocurrencies with an iron fist, which may end up stifling innovation and causing multiple damages within the industry.
Attorney General Bird has criticized the SEC under the Biden administration for blocking states from reigning in fraud and protecting families going bankrupt due to crypto scams. She claims that such excess regulation would stifle the free market and even allow the SEC to abuse its regulatory power in a non-transparent, accountability-less manner over crypto.
The Iowa Attorney General’s Office claims the SEC is going beyond its authority and preempting Congress, which would make such action contrary to the Administrative Procedure Act (APA) and Major Questions Doctrine. They claim that the common types of cryptocurrency are not investment contracts within the bounds set by the Securities Act of 1934, and so, they plead to the court to keep SEC forces in harness.
Last week, cryptocurrency companies, industry groups, and these seven states filed five amicus briefs in a federal case in Fort Worth, Texas – that were considered more broadly. The complaints generally claim the SEC is exceeding its authority and seeking penalties in cases where it shouldn’t. The amici say the SEC has wrongly classified cryptocurrencies as securities, veering from past enforcement and bypassing calls for rulemaking with notice-and-comment that left industry participants in “an impossible bind.
The seven Republican AGs filed an amicus brief with the U.S. District Court for the Northern District of Texas, saying they take no position on whether or not any particular company in this instance is an excellent corporate actor but that as far as Congress has given regulatory authority to The SEC does not have a clear mandate to intervene it involves regulating sales and transactions involving cryptocurrency. They argue that cryptocurrencies are not investment contracts under the Securities Act of 1943 and further assert that enforcement actions targeting coin offerings by the SEC overreach its authority.
Congress never gave the SEC the authority to regulate cryptocurrency, and there needs to be accountability to verify the SEC’s activities are lawful,’ the Iowa Attorney General’s Office pointed out.
The coalition and industry organizations ask that the court find cryptocurrencies are not investment contracts subject to the Securities Act, preventing an overreach of regulation by the SEC intervening with stifling potential blockchain innovation while leaving fraudsters uncovered under state-level consumer protection statutes. This well-coordinated pushback from states and industry groups indicates broader resistance to the SEC’s current crypto regulatory posture in favor of sensible regulation that encourages innovation and safeguards investors.
