tl;dr
Former SEC adviser Justin Slaughter warns that despite the departure of SEC Chair Gary Gensler, the SEC's regulation-by-enforcement approach toward crypto continues, shifting mainly to state-level lawsuits against exchanges like Coinbase. State attorneys general, such as Oregon’s, are filing cases t...
Former SEC adviser Justin Slaughter warns that despite leadership changes at the federal level, regulation-by-enforcement against cryptocurrency continues unabated at the state level, highlighted by ongoing lawsuits such as Oregon's action against Coinbase.
Oregon’s lawsuit closely mirrors the SEC’s earlier case but relies on state law and significantly reduces references to “crypto asset securities,” reflecting differing legal strategies and resources between state and federal regulators.
The absence of comprehensive federal legislation results in a fractured regulatory environment, with state courts setting inconsistent legal precedents that complicate unified defense strategies for crypto firms.
Slaughter emphasizes that without decisive congressional action to establish clear federal laws, regulatory uncertainty and aggressive enforcement actions targeting the crypto industry will persist indefinitely.
The departure of former SEC Chair Gary Gensler has not halted the SEC’s regulation-by-enforcement approach. According to Slaughter, regulatory pressure has shifted primarily to state attorneys general, who initiate cases mimicking previous SEC complaints but under different legal frameworks.
He notes that such patterns are typical during political transitions, where unresolved regulatory agendas move from federal to state authorities.
State-level lawsuits, like Oregon’s separate case against Coinbase, replicate SEC allegations but adapt language to suit state statutes, illustrating how state and federal regulators approach crypto oversight differently.
State attorneys general typically face constraints in expertise and resources compared to federal agencies, but their unpredictable enforcement actions increase regulatory complexity for the crypto industry.
Slaughter highlights the urgent need for federal legislation as the continued state-level litigation exposes crypto firms to inconsistent rules and legal outcomes.
Many state suits intentionally remain under state jurisdiction to avoid federal courts, making cohesive legal defenses difficult and fostering regulatory fragmentation.
He warns that litigation alone cannot resolve this uncertainty, urging Congress to create a unified regulatory framework to bring clarity and stability to the digital asset sector.
“The issue won’t go away or go back in the bottle,” Slaughter insists, underscoring the critical importance of legislative action to address crypto industry regulation comprehensively.