• Eighteen U.S. states have filed a lawsuit against the SEC and Chair Gary Gensler, alleging regulatory overreach and stifling of innovation in the crypto industry.
• Amid mounting backlash and President-elect Donald Trump’s expected leadership changes, Gensler signaled his potential resignation during a recent speech.

The cryptocurrency industry is intensifying its opposition to U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler, as legal and public challenges continue to mount. Eighteen U.S. states have filed a lawsuit against the SEC, accusing the agency of overreach and alleging that Gensler’s regulatory actions unfairly target the crypto sector.

The lawsuit, led by Republican attorneys general, argues that Gensler’s “regulation by enforcement” approach undermines states’ authority to regulate cryptocurrencies and stifles innovation.

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Kentucky Attorney General Russell Coleman, a leading voice in the suit, stated that the SEC’s aggressive tactics have exceeded its mandate, describing the actions as “gross government overreach.” The plaintiffs contend that Gensler’s leadership has sought to consolidate control at the federal level, stripping states of their ability to craft independent policies on cryptocurrency.

The legal action comes amidst growing speculation that Gensler may resign following the election of President-elect Donald Trump. Although Trump cannot directly dismiss Gensler, he is expected to appoint a new SEC chair, effectively sidelining the current chief.

During a recent speech, Gensler acknowledged the tradition of SEC chairs stepping down after an administration change, signaling his potential departure. “It’s been a great honor to serve with them, doing the people’s work,” Gensler remarked, emphasizing his efforts to protect investors and uphold market integrity.

Under Gensler’s tenure, over half of the SEC’s crypto-related enforcement actions since 2015 have been initiated. His critics, however, argue that his focus has been more on punitive measures than fostering growth.

Tyler Winklevoss, co-founder of cryptocurrency exchange Gemini, accused Gensler of intentionally stifling the industry for personal and political gain.

“Even if this meant nuking an industry, tens of thousands of jobs, people’s livelihoods, billions of invested capital, and more. Ironically, his sociopathic ambition ended up torching his own political party.” Winklevoss said.

Meanwhile, the lawsuit and Trump’s presidency are fueling optimism within the crypto sector. Industry leaders like Michael Saylor have described the potential change in leadership as a pivotal moment for digital assets. The states’ lawsuit against the SEC underscores the growing demand for clear, consistent regulations to replace what many see as Gensler’s contentious enforcement-driven strategy.