The Attorney General of Iowa, Brenna Bird, has filed an amicus brief asserting that the United States Securities and Exchange Commission (SEC) exceeds its regulatory authority over the cryptocurrency sector.
This brief, supported by attorneys general from Arkansas, Indiana, Kansas, Montana, Nebraska, and Oklahoma, claims the SEC’s actions are stifling innovation and could undermine state laws crucial for protecting consumers.
The brief raised constitutional issues, invoking the Major Questions Doctrine and federalism principles. They argue that regulating an industry as vast as cryptocurrency requires explicit congressional authorization, which they contend the SEC lacks. The brief claimed that the SEC’s current method of regulation through enforcement actions rather than creating a proper legislative framework violates the Administrative Procedure Act (APA).
“The SEC’s attempt to regulate cryptocurrencies without proper congressional authorization is a direct threat to state authority and consumer safety,”
the filing stated.
A key point of criticism in the brief is the SEC’s history of enforcement actions against cryptocurrency entities. The brief explicitly mentions the case of SEC v. SafeMoon LLC, in which the regulator classified SafeMoon’s token as a security based on its price fluctuations.
The coalition cautions that this precedent could enable the SEC to regulate any commodity that experiences value changes, not just cryptocurrencies.
The filing also challenged the SEC’s classification of several cryptocurrencies as securities, arguing that most do not meet the criteria of an investment contract as defined by the Supreme Court’s Howey test.
The brief argued that the SEC’s approach threatens the free market and could lead to unaccountable regulatory control over the cryptocurrency industry. It further criticizes what it calls “The Biden SEC” for attempting to bypass state consumer-protection laws and abuse its regulatory power.
As of press time, the SEC had not responded to the filing.
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