On Wednesday, a federal judge agreed to suspend an ongoing lawsuit against the U.S. Securities and Exchange Commission (SEC) by 18 state attorneys general and a decentralized finance lobbying group after the parties took notice of the new leadership of the SEC.
The state attorneys general, all Republicans, filed the lawsuit along with the DeFi Education Fund last November after Donald Trump won the 2024 presidential election. They accused the federal securities regulator of exceeding its authority in filing lawsuits against cryptocurrency exchanges. The SEC hinted in a filing on Wednesday that the lawsuit could end if Paul Atkins is confirmed as the new chairman.
“In support, defendants assert that the case may be resolved as a result of the change in leadership at the SEC,” the filing said.
The judge ordered both parties to file a joint status report within 30 days, but suspended all deadlines for 60 days.
Initially, the lawsuit claimed that the SEC’s enforcement actions infringed on the ability of state regulators to regulate digital asset companies within their borders.
“For example, some states have enacted regulatory regimes for financial institutions that focus on digital assets; others require digital asset platforms to obtain money transmitter licenses and surety bonds to guarantee liquidity,” the lawsuit states.
While states’ regulatory approaches will vary based on local needs, they remain committed to providing transparent and easy-to-administer rules. Congress has repeatedly rejected proposals to give federal agencies broad regulatory authority over digital assets.
Congress is expected to pass market structure legislation this year that could address the role of federal regulators in regulating cryptocurrencies, and key committees have begun holding hearings.
Meanwhile, the SEC has dropped investigations and lawsuits against more than a dozen companies and suspended lawsuits against several others.
IRS Broker Rule
A separate lawsuit filed by the DeFi Education Fund, the Texas Blockchain Council and the Blockchain Association against the IRS was also dropped on Wednesday. The lawsuit argued that the IRS’ DeFi Broker Rule exceeded the agency’s authority.
Trump signed a joint resolution of the House and Senate last week under the Congressional Review Act to repeal the rule – the first legislation targeting cryptocurrencies signed since he became president.
In a filing on Wednesday, the parties said the lawsuit had become “moot” after Trump signed the resolution.
