Texas Attorney General Leads Lawsuit Against SEC Over Crypto Regulations

According to ShibDaily, Texas Attorney General Ken Paxton, along with a coalition of 18 states, has initiated legal action against the U.S. Securities and Exchange Commission (SEC) and members of the Biden-Harris administration. The lawsuit accuses them of unlawfully imposing extensive cryptocurrency regulations without proper legal authority. A press release from the Texas Attorney General’s office indicates that the new SEC rules mandate digital asset platforms to register as securities exchanges, dealers, brokers, and clearinghouses. The filing argues that these requirements impose federal securities law compliance on platforms, despite the absence of explicit regulations in existing statutory text. The SEC, however, maintains that such regulations are sanctioned by the Securities Act of 1933 and the Exchange Act of 1934. The lawsuit contends that these nearly century-old laws were not designed to address digital assets like cryptocurrencies. The press release further claims that the SEC’s regulatory actions exceed its legal authority, described as ultra vires, and violate the Administrative Procedure Act. Attorney General Paxton stated, “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.” The coalition of states argues that staking activities do not meet the criteria outlined in the Howey Test, the established legal framework for determining whether an asset qualifies as a security. Additionally, the lawsuit asserts that the penalties and restrictions imposed on cryptocurrency platforms, without a clear regulatory framework, have created significant risks for one of the nation’s rapidly growing economic sectors. It further argues that these actions infringe upon states’ rights to regulate their own economies. Following the announcement of the lawsuit, the Public Utilities Commission of Texas (PUCT) introduced a new regulation requiring Bitcoin miners using the Energy Reliability Council of Texas (ERCOT) grid to register and provide key details of their facilities. This measure aims to protect the stability of Texas’ power grid amid the expanding crypto mining operations in the state. The regulation comes amid discussions about Texas’ emergence as a leading hub for crypto innovation. In a recent interview, Texas Senator Ted Cruz criticized the federal government’s stance on cryptocurrency, stating, “I don’t want federal bureaucrats having control over it.” This article is provided for informational purposes only and should not be construed as financial advice. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.