Attorney General Ken Paxton has filed a new lawsuit against the Biden administration challenging the U.S. Securities and Exchange Commission’s recent regulations on cryptocurrency markets.
Paxton, leading a coalition of 18 states, claims in a recent press release that the federal government has once again overstepped its authority by imposing broad new rules on “digital assets.”
The SEC’s regulations, which were introduced earlier this year, require cryptocurrency or digital asset platforms to register as securities exchanges, dealers and brokers. The rules would also push these platforms to comply with a variety of federal securities laws, despite the fact that those laws, first enacted in the 1930s, were never intended to govern or oversee emerging technologies like cryptocurrencies.
Paxton says that the SEC’s actions are illegal, arguing that the agency lacks the authority to regulate digital assets under the Securities Act of 1933 and the Securities Exchange Act of 1934, which predate cryptocurrency by nearly a century.
According to Paxton, the new regulations from Biden’s office infringe on the rights of states to regulate cryptocurrencies or other digital assets on their own terms.
“Federal bureaucrats in Washington have no authority to dictate to States how they should interact with cryptocurrency nor do they have the power to crush this new field with a regulatory framework that Congress never intended,” Paxton said.
Paxton and his coalition claim that states should have the freedom to create their own regulations for cryptocurrency or other digital assets, without any interference from Washington. The filing asserts that by forcing cryptocurrency into “ill-fitting federal securities laws and inapt disclosure regimes,” the SEC is damaging the industry overall and the consumers it claims to protect.
“Instead of respecting that constitutional balance of power, and allowing States to develop and enforce their own tailored digital asset regulations based on their own policy priorities … the SEC’s assertion of sweeping jurisdiction without congressional authorization deprives States of their proper sovereign role and chills the development of innovative regulatory frameworks for the digital asset industry,” the filing states.
The legal challenge from Paxton comes amid increasing concerns in the cryptocurrency industry that federal regulations could hinder innovation and limit the growth of digital assets in America. Several states, including Texas, have already passed laws to establish their own regulatory frameworks for cryptocurrency, as previously reported by The Dallas Express.
Earlier this week, Texas implemented new regulations requiring Bitcoin miners to register and disclose key information to the government.