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18 States Take Legal Action Against SEC and Gensler’s Crypto Policies

18 states file lawsuit against the SEC for 'government overreach.'

3 minNovember 15, 2024

Highlights:

Crypto firms demand clarity as regulatory costs soar.

18 states sue SEC over crypto "government overreach."

Industry leaders argue regulations stifle U.S. innovation.

18 States Take Legal Action Against SEC and Gensler’s Crypto Policies

A coalition of 18 U.S. states, including Texas, Nebraska, and Tennessee, has filed a lawsuit against the Securities and Exchange Commission and Chairman Gary Gensler. They argue that the SEC has engaged in “gross government overreach” against the emerging crypto industry. Since 2021, crypto firms have spent $426 million defending against SEC actions. 

 

A United Front Against SEC Overreach

 

 

These states are uniting to challenge what they view as an aggressive regulatory approach by the SEC. Experts argue that the agency’s policies lack clarity, creating confusion and stifling growth. 

 

They describe compliance as a moving target, one that ultimately drives business and talent abroad. SEC Commissioner Mark Uyeda has called the current policy approach “a disaster for the whole industry,” echoing widespread frustration.

 

The Blockchain Association, a major advocacy group for crypto, highlights the immense financial toll of the SEC’s actions. This financial burden has been especially hard on small startups. 

 

Gensler Holds Firm While Change Looms

 

Despite criticism, Gensler remains committed to an “enforcement-first” approach. In a recent speech at the Practicing Law Institute, he doubled down on his policies. However, with President-Elect Donald Trump preparing to take office in January 2025, Gensler’s position as chairman may be in jeopardy.

 

Several replacements for Gensler have already been discussed. Former SEC Commissioner Dan Gallagher, currently with Robinhood, and Commissioner Mark Uyeda are two prominent candidates. 

 

Both share a desire to create a more balanced regulatory environment. Gallagher’s own experiences with SEC scrutiny, especially a recent Wells Notice targeting Robinhood Crypto, have further solidified his views on fairer oversight.

 

As this lawsuit unfolds, the industry hopes that the support of these 18 states may finally lead to a more stable regulatory framework. Change could come swiftly, with new leadership on the horizon and the potential for policies that support innovation in the U.S.

 

 

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