The Utah Attorney General’s Office at the Capitol in Salt Lake City is pictured Tuesday, Jan. 16, 2024. (Photo by Spenser Heaps for Utah News Dispatch)

Utah’s attorney general is joining a coalition of 17 other states that oppose the federal government’s attempt to regulate cryptocurrencies, arguing that authority should instead be left to the states.

Sean Reyes, who did not run for reelection as Utah attorney general, signed a state complaint this week alleging that the U.S. Securities Exchange Commission, or SEC, imposes regulations that contradict applicable state laws.

Reyes will be replaced in January by Republican Derek Brown, the state’s elected attorney general.

Some states have imposed their own regulations regarding cryptocurrency, a growing form of decentralized digital currency that operates through a computer network and does not rely on a bank or government for compliance.

But the SEC, according to the complaint, “failed to respect this distribution of powers.”

“Instead, without Congressional authorization, the SEC sought to unilaterally wrest regulatory authority from the states through a series of enforcement actions targeting the digital assets industry,” states a complaint filed before the federal court for the Eastern District of Kentucky.

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The SEC’s regulatory approach is based on the idea that all purchases and sales of digital assets are “investment contracts,” according to the complaint, meaning they are considered securities transactions.

This means that all digital asset platforms must register with the SEC as securities exchanges, dealers, brokers and clearing agencies to comply with the federal law, which “subjects the entire asset industry digital systems to a single ill-adapted regime that Congress adopted for a completely different area.” sort of financial instrument,” the States assert.

Claiming that the policy violates the Administrative Procedure Act, the complaint asks the court to declare the policy illegal and prevent the SEC from taking any enforcement action.

“The SEC is drastically and illegally overstepping its limited authority by applying outdated legal theories in a desperate attempt to suppress the trillion-dollar digital assets industry,” Reyes said in a statement. “The desire to protect those who purchase cryptocurrencies is understandable. But there are ways to do it constitutionally. States like Utah have taken sound approaches to balancing blockchain growth and safeguards. The SEC’s attempt to regulate most digital assets into oblivion is completely inappropriate.

In addition to Utah, Arkansas, Florida, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Ohio, Oklahoma, South Carolina, Tennessee, Texas and West Virginia all signed the complaint.

The DeFi Education Fund, an advocacy group promoting decentralized currency, also signed on to the lawsuit.

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