According to PANews, seven U.S. states have jointly challenged the SEC's regulatory authority over cryptocurrencies. A coalition of seven states led by Iowa Attorney General Brenna Bird filed a friend-of-the-court brief on July 10, opposing the SEC's attempt to regulate cryptocurrencies. The coalition includes Arkansas, Indiana, Kansas, Montana, Nebraska, and Oklahoma.
The alliance pointed out that the SEC's "power expansion" will hinder innovation, hurt the cryptocurrency industry, and exceed its authority. They believe that the SEC's regulatory actions not only prevent states from protecting citizens from scams, but also undermine the free market. The Iowa Attorney General's Office emphasized that the SEC's actions to bypass the new powers granted to it by Congress are illegal, suppress innovation, and allow scammers to go unpunished.
The brief also explains that the SEC violated the Administrative Procedure Act and the Significant Issues Doctrine and calls on the court to stop the SEC from exceeding its authority. The seven-state coalition argues that typical cryptocurrencies do not qualify as investment contracts under the Securities Act of 1934.