A group of attorneys sued the SEC on behalf of various states, denying it the authority to sue the cryptocurrencycurrency exchange Kraken. Montana, Arkansas, Iowa, Mississippi, Nebraska, Ohio, South Dakota, and Texas were the states that represented their parties. They argued that if the government issues certificates for the coins as securities by default, it becomes a negative practice for consumers.
However, state officials did not claim that the Kraken is funding this; rather, they highlighted concerns about cryptocurrencycurrency licensing and laws. They stated that because bitcoin is still in its early stages, some states’ legislation may provide superior protections than complete federal securities laws.
The briefing warned that the SEC’s victory in the Kraken action could trump critical state laws governing digital assets. It comes as the SEC sues Kraken in 2022 for allegedly operating an unlicensed exchange service, following similar claims against Coinbase and Binance.
Kraken claims that their platform allows for the legitimate trading of commodities and currencies rather than securities. The corporation recently tried to dismiss the SEC’s lawsuit entirely, claiming that the agency lacked proof and exceeded its power.
The states agreed that not all cryptocurrencycurrencies are considered securities by default, emphasizing the need for regulatory clarity. Their filing is consistent with that of other cryptocurrency industry associations that have contributed papers in support of Kraken’s position. Senator Lummis also criticized the SEC of justifying cryptocurrencycurrency enforcement without clarifying how securities rules apply, which creates compliance uncertainty.
As the SEC moves to expand cryptocurrencycurrency monitoring, states and industry players say that it has yet to justify imposing broad securities rules on digital asset trading.
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