In a ground-breaking lawsuit, 18 U.S. states have taken legal action against the United States Securities and Exchange Commission (SEC) and its commissioners. The states claim the SEC, under its current chief Gary Gensler, has unfairly targeted the flourishing crypto industry and exceeded their constitutional authority in doing so.
Signed by 18 Republican Attorneys General, the lawsuit accuses the SEC of a gross overreach of government power through its regulatory enforcement manoeuvres against the $3 trillion cryptocurrency industry, alleging infringement on state rights to govern their economic affairs.
Despite the mounting legal pressures, Gensler has reaffirmed his stance on cryptocurrency policy and enforcement, while revealing no intention to step down from the SEC leadership ahead of President-elect Donald Trump’s impending tenure. Instead, he points to the SEC’s record on crypto enforcement and approval of crypto-related financial products, such as Bitcoin exchange-traded funds and futures.
In a recent speech at the Practicing Law Institute’s 56th Annual Institute on Securities Regulation, Gensler defended his focus on requiring proper registration and public disclosure for tokens considered as securities, which are estimated to be around 10,000. He also criticised crypto firms that failed to follow what he called the “common-sense rules of the road.”
While the future of Gensler’s position under Trump’s administration is uncertain, Trump has explicitly stated his intent to oust Gensler from his position, indicating a potential new direction for the SEC’s approach to crypto enforcement. However, whether Trump can actually remove Gensler without substantial cause remains in question, as any replacement would call for Senate approval.