Michaela
Texas Attorney General Ken Paxton, joined by an 18-state coalition, has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) and members of the Biden-Harris administration, accusing them of unlawfully imposing sweeping cryptocurrency regulations without proper legal authority.
A press release from the Texas Attorney General’s office claims that the new SEC rules require digital asset platforms to register as securities exchanges, dealers, brokers, and clearinghouses. The filing argues that these mandates impose federal securities law compliance on platforms, even though such regulations are not explicitly outlined in existing statutory text.
However, the SEC claimed such regulations are authorized by the Securities Act of 1933 and Exchange Act of 1934. The filing argued that the nearly century-old laws cited by the SEC were not designed to address digital assets such as cryptocurrencies.
The press release further stated that the SEC’s regulatory actions are described as exceeding its legal authority (ultra vires) and violating the Administrative Procedure Act.
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“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,” said Attorney General Paxton.
Unconstitutional SEC Lawsuit
In the lawsuit, the coalition of states contended that staking activities failed to meet the requirements outlined in the Howey Test, the established legal framework used to determine whether an asset qualifies as a security.
Additionally, the lawsuit claimed that the penalties and restrictions imposed on cryptocurrency platforms, without a clear regulatory framework, have created “substantial risks” for one of the nation’s rapidly expanding economic sectors. It further argues that these actions violate states’ rights to regulate their own economies.
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Texas as a New Crypto “Oasis”
Following the news of the lawsuit, the Public Utilities Commission of Texas (PUCT) implemented 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 move was introduced to safeguard the stability of Texas’ power grid amid the growing expansion of crypto mining operations in the state. The regulation followed discussions about Texas’ emergence as a leading hub for crypto innovation.
In a recent interview, Texas Senator Ted Cruz criticized the federal government for its views on cryptocurrency. “I don’t want federal bureaucrats having control over it,” Cruz was quoted as saying.
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MICHAELA
Michaela is a news writer focused on cryptocurrency and blockchain topics. She prioritizes rigorous research and accuracy to uncover interesting angles and ensure engaging reporting. A lifelong book lover, she applies her passion for reading to deeply explore the constantly evolving crypto world.
