Montana, along with seven other states, has criticized the SEC’s expansive definition of “investment contract” in an amicus curiae filed in the case of the SEC versus Kraken, a prominent U.S.-based cryptocurrency exchange. The states argue that crypto assets are not automatically classified as securities and contend that the SEC’s broad interpretation of “investment contract” exceeds its regulatory authority, potentially preempting state legislation.
The amicus curiae, supported by Arkansas, Iowa, Mississippi, Nebraska, Ohio, South Dakota, and Texas, challenges the SEC’s regulatory actions, asserting that they extend beyond its designated jurisdiction to assets outside its purview.
Montana’s Attorney General, Austin Knudsen, emphasized that crypto assets do not inherently qualify as securities, criticizing the SEC for attempting to regulate non-securities through an overly broad interpretation of investment contracts.
The states argue that the SEC’s expansion of its regulatory scope conflicts with traditional state regulation, particularly in areas such as consumer protection. They caution that such a broad interpretation would hinder state experimentation and regulation of cryptocurrency assets, impeding their development.
Marco Santori, Kraken’s Chief Legal Officer, commended the compelling arguments presented by these states, highlighting their focus on consumer protection and opposition to the unconstitutional expansion of the SEC’s authority. Although the amicus curiae was not filed explicitly in support of Kraken, it aligns against the SEC’s regulatory overreach.
