State AGs Challenge SEC's Authority in Kraken Crypto Case

Eight state attorneys general file an amicus brief opposing the SEC's regulation of crypto assets without clear congressional authorization.

Eight U.S. state attorneys general argue that the SEC exceeded its authority by attempting to regulate cryptocurrencies as securities in its lawsuit against Kraken.
The states involved are Montana, Arkansas, Iowa, Mississippi, Nebraska, Ohio, South Dakota, and Texas, emphasizing the lack of congressional authorization for the SEC to regulate crypto assets in this manner.
The amicus brief supports neither party directly but opposes the SEC's approach, arguing it could preempt state consumer protection laws more suited to non-securities products.
The SEC's expansive interpretation of 'investment contract' is criticized for potentially overreaching its regulatory bounds and stifling state legislative experimentation in the crypto sector.
The case against Kraken includes allegations of operating without registration and commingling customer and corporate funds, with the SEC's authority to regulate these activities under scrutiny.