In a notable move against the US Securities and Exchange Commission (SEC) and its stance on cryptocurrency, 18 states have initiated legal action against the agency and its commissioners as of Thursday.

Allegations of ‘Improper Targeting’ of the Crypto Industry

According to FOX journalist Eleanor Terret, this lawsuit charges the SEC with “unconstitutional overreach” and “improper targeting” of the cryptocurrency industry, particularly under Chair Gary Gensler’s leadership.

The lawsuit, led by 18 Republican Attorneys General, point to what they call “excessive government overreach” stemming from the SEC’s enforcement-centric regulation of the $3 trillion cryptocurrency market. 

The states assert that these actions violate their rights to manage their own economic environments and claim that the SEC disregards the existing regulatory frameworks for financial institutions involved with digital assets. 

They argue that the SEC has sought to “unilaterally assume regulatory control from the States” without congressional approval, executing a series of enforcement actions against the crypto sector.

Chair Gensler Suggests Possible Departure

The states involved in this lawsuit include Kentucky, Nebraska, Tennessee, West Virginia, Iowa, Texas, Mississippi, Montana, and Florida. 

Importantly, Florida has been making efforts towards embracing digital assets, with proposals to classify Bitcoin—the largest cryptocurrency—as a strategic reserve asset for the state.

Adding to the uncertainty surrounding the SEC, NewsBTC reported that Chair Gensler hinted at a possible resignation in a message to agency staff that had the tone of a farewell after his three-year tenure under President Biden.

In the last nine days, following Donald Trump’s election win against Vice President Kamala Harris, the total valuation of the crypto market has surged close to $3 trillion, currently standing at $2.8 trillion after a slight decline in digital asset prices over the past day.

Image credit: DALL-E, chart from TradingView.com