The Securities and Exchange Commission (SEC) and Chairman Gary Gensler are accused of exceeding their authority in regulating cryptocurrencies, causing $426 million in losses to the industry.
On November 14, 18 US states including Nebraska, Tennessee, Wyoming and Texas, filed a lawsuit against the Securities and Exchange Commission (SEC) and Chairman Gary Gensler, alleging that the SEC exceeded its authority by imposing regulations on cryptocurrencies without clear authorization from Congress, causing great damage to the industry.
According to the Blockchain Association, from 2021 to now, SEC legal actions have caused cryptocurrency companies to suffer losses of up to $426 million.
The lawsuit stresses that by attempting to seize control of the cryptocurrency sector, the SEC has created instability and stunted the growth of the market, which is currently regulated by state regulators.
According to these states, the SEC's enforcement of strict measures without a clear legal framework has created great uncertainty for businesses, forcing many projects to move operations to countries with more transparent regulations.
Source: Eleanor Terrett
Cryptocurrency industry leaders have criticized the SEC’s compliance-by-enforcement approach under Chairman Gary Gensler, arguing that it has made it difficult for developers and left them facing an unstable regulatory landscape, discouraging many investors and delaying development plans, undermining U.S. competitiveness in the cryptocurrency space.
Although President-elect Donald Trump has pledged to shake up the SEC’s leadership, including considering replacing Chairman Gensler, Gensler has remained hawkish. In a recent speech, he emphasized that cryptocurrencies are a high-risk sector that lacks sustainable use cases and has the potential to harm investors.
Whether Gensler stays in the job will depend on the new administration. Potential replacements include SEC Commissioner Mark Uyeda, who has been a vocal critic of the current policy, and Dan Gallagher, a former SEC Commissioner who is now Robinhood's chief legal and compliance officer.