The news today coming out of Kentucky is a cannon blast against regulatory overreach. A federal judge putting the brakes on the 18-state action against the SEC? That’s not just a procedural delay—that’s a flashing red light, signaling that the tide is about to turn. Admittedly, this problem goes beyond crypto. At its core, it pushes against the fundamental limits of government power and defends freedom to innovate without the deadening hand of red tape.
Gensler's Legacy: Regulatory Overreach?
Let's be blunt: Gary Gensler's SEC seemed determined to regulate crypto into oblivion. It seemed like every two weeks there was a new announcement of the SEC cracking down on crypto. The lawsuit unequivocally charges him with exercising authority like a one-man legislature. It argues that he subverted Congress and forced through his own version of the future of crypto. Remember that old saying, "If it walks like a duck, quacks like a duck…" Well, Gensler's SEC was acting like a body exceeding its constitutional authority. This isn't about whether you like crypto or not; it's about whether we allow government agencies to rewrite the rules on a whim.
The states have every reason to be alarmed. Republican AGs from Kentucky, Florida, Texas, Ohio, and elsewhere are highlighting a critical point: the SEC's aggressive crypto regulation tramples on state-regulated areas and violates the core principles of federalism. These regulations must have needed state legislative backing, but the SEC overstepped their bounds and imposed these regulations by fiat.
The mere fact that the SEC itself proposed that new leadership could render the lawsuit unnecessary says all that it needs to say. What does that tell you? It suggests the very least – an acknowledgment, albeit small, that what came before was, let’s say, broken.
Individual Liberty and Economic Freedom
Think about the implications here. After all, crypto, at its core, is about decentralization and empowering individuals. It’s about empowering individuals with greater control over their own finances and less dependence on centralized institutions. And what's more conservative than self-reliance? The SEC’s heavy-handed approach threatened to stifle this innovation. It risked making crypto simply an extension of the same highly surveilled and censored financial system.
This is nearly identical to the early internet days. Can you imagine if, at that time, the government had attempted to regulate every website, every forum, every new technology to heel. Without it, we certainly wouldn’t have the dynamic, creative, cutting edge Internet ecosystem that we enjoy today. The same principle applies to crypto. We should have a light touch regulatory framework that considers consumer protections but doesn’t kill innovation in the process.
The DeFi Education Fund has dropped its lawsuit against the IRS. This act, coming on the heels of the repeal of the DeFi broker rule, is yet another positive development for the industry. Now, for common sense and against regulatory overreach, that bill had the unmistakable support of President Trump, who signed it. This unusual pattern of suspensions and dismissals under the new SEC leadership could be a sign of a new approach.
A Trend of Lawsuits Suspended
The judge’s 60-day pause—which has a joint status report due within weeks—is a lot more than a formality. It's an opportunity. This is a unique opportunity for the SEC to recalibrate its approach. More importantly, they should listen to the states and work with them on establishing a regulatory framework that helps foster innovation rather than suffocating it. I don’t want you to react to that, I want you to consider what that means over the long haul.
This isn't just about crypto. It's about a broader principle: government exists to serve the people, not the other way around. We must remain ever-watchful, ever-committed to defending our personal liberties and our economic liberty from government encroachment. From an enforcement perspective, the SEC’s previous leadership decisions seemed like a move in the opposite direction. Maybe, just maybe, the tide really is turning. The judge’s pause presents that glimmer of hope in this case that common sense and limited government will prevail. Only time will tell if the new SEC leadership will recognize the previous team’s errors. They need to know what course to chart for their organization. For now, let's hope they do. You should hope they do.
