Summary
Eight state attorney generals filed an amicus brief against the SEC, alleging that the agency overstepped its bounds in trying to regulate crypto as securities. They argue that the SEC does not have the authority to regulate crypto in this way and that it could preempt state consumer protection laws. The states believe that the SEC is trying to apply the term “investment contract” to assets that do not meet the Howey definition and are hindering state legislative experimentation in this area.
Key Points
1. The state attorney generals allege that the Securities and Exchange Commission exceeded its delegated powers in attempting to regulate non-securities, specifically in the case involving Kraken’s parent company.
2. Eight state AGs filed an amicus brief pushing back against the SEC’s enforcement actions in cases involving crypto, arguing that the agency has not been given the power to regulate crypto as a security.
3. The states oppose the SEC’s regulation of crypto assets absent an investment contract, stating that Congress has not delegated that authority to the SEC and that the agency’s overreach could potentially preempt state statutes better tailored to the specific risks of non-securities products.