The office of the Utah Attorney General at the Capitol in Salt Lake City is pictured on Tuesday, Jan. 16, 2024. (Photo by Spenser Heaps for Utah News Dispatch)
Utah’s attorney general is joining a coalition of 17 other states pushing back on the federal government’s attempt to regulate cryptocurrencies, arguing that authority should instead be left to states.
Sean Reyes, who did not run for reelection as the Utah Attorney General, signed the state onto a complaint this week alleging the U.S. Securities Exchange Commission, or SEC, is imposing regulations that contradict existing state laws.
Reyes will be replaced in January by Republican Derek Brown, the state’s attorney general-elect.
Some states have imposed their own regulations surrounding cryptocurrency, a growing form of digital, decentralized currency that works through a computer network and doesn’t rely on a bank or government to be upheld.
But the SEC, according to the complaint, “has not respected this allocation of authority.”
“Instead, without Congressional authorization, the SEC has sought to unilaterally wrest regulatory authority away from the States through an ongoing series of enforcement actions targeting the digital asset industry,” reads a complaint, filed in federal court in Kentucky’s Eastern District.
The SEC’s regulatory approach is based on the idea that all purchases and sales of digital assets are “investment contracts,” according to the complaint, which means they qualify as securities transactions.
That means all digital asset platforms need to register with the SEC as securities exchanges, dealers, brokers and clearing agencies to comply with federal law, which “subjects the entire digital asset industry to a single ill-fitting regime that Congress enacted for an entirely different kind of financial instrument,” the states allege.
Claiming the policy violates the Administrative Procedures Act, the complaint asks the court to declare the policy unlawful and prevent the SEC from taking any kind of enforcement action.
“The SEC is drastically and illegally overstepping its limited authority by enforcing out-of-date legal theories in a desperate attempt to suppress the trillion-dollar digital asset industry,” Reyes said in a statement. “The desire to protect those who buy crypto is understandable. But there are ways to do so constitutionally. There are sound approaches that states like Utah have taken to balance blockchain growth and safeguards. The SEC’s attempt to regulate into oblivion most digital assets is wholly improper.”
In addition to Utah, Arkansas, Florida, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Ohio, Oklahoma, South Carolina, Tennessee, Texas, and West Virginia all signed onto the complaint.
The DeFi Education Fund, an advocacy group promoting decentralized currency, also signed onto the lawsuit.
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