18 Republican attorneys general in the US sued the SEC for allegedly exceeding its authority to regulate digital assets. In the application, it was claimed that the SEC violated the regulatory jurisdiction of the states and developed restrictive practices for the crypto industry without authorization from Congress. The attorneys general asked the court to determine that digital assets are not investment contracts and therefore the charges should be stayed.
SEC Chairman Gary Gensler and the commissioners were also named as defendants in the lawsuit. The attorneys general criticized the application of the 1946 Howey Test to the crypto industry, arguing that an asset should only be considered as an asset without being associated with continuing obligations. A spokesperson for the SEC declined to comment on the lawsuit, but said they would continue to cooperate with state regulators.
