Judge Stephanos Bibas of the Third Circuit Court has criticized the U.S. Securities and Exchange Commission's (SEC) current approach to cryptocurrency regulation, describing it as lacking clarity and consistency. This statement was made in a ruling filed on January 13.
"fundamentally incompatible with the operation of digital asset securities," said Bibas. "SEC's order was conclusory and insufficiently reasoned."
According to Justia, Bibas authored a decision addressing the SEC’s refusal to provide regulatory clarity for digital assets, as requested by Coinbase. Arguments were presented on September 23, 2024, with Coinbase highlighting difficulties in applying securities laws to decentralized technologies. The court ordered the SEC to revisit its decision and provide a more thorough explanation.
As reported by The Hill, 18 Republican attorneys general, led by Kentucky's Russell Coleman, have filed a lawsuit against the SEC and Chair Gary Gensler. They accuse the agency of overstepping its authority in regulating the cryptocurrency industry. The lawsuit argues that the SEC is undermining state sovereignty by asserting broad jurisdiction over crypto enforcement, preventing states from creating their own tailored digital asset regulations. The complaint claims that the SEC’s attempt to apply federal securities laws to digital assets is harming citizens by displacing more appropriate state laws designed for consumer protection.
According to his X account, Gensler announced on November 21, 2024, that he will step down as chair of the SEC on January 20, 2025. His tenure began in 2021 and focused on regulatory oversight, market transparency, and enforcement actions against cryptocurrency firms. His departure marks the end of a period of SEC leadership during a time of evolving financial and digital asset markets.
Stephanos Bibas serves as a judge on the U.S. Court of Appeals for the Third Circuit. He was nominated by President Donald Trump in 2017 and confirmed by the Senate on November 2, 2017. Bibas previously held academic positions at the University of Pennsylvania Law School, where he directed the Supreme Court Clinic and taught law and criminology.
According to SIFMA (Securities Industry and Financial Markets Association), the SEC has been ramping up its regulatory activity with 54 items on its rulemaking agenda as of last fall. In the first quarter of 2022 alone, the SEC issued 16 new rule proposals—a pace typically seen only during major financial crises like the Enron scandal and the 2008 financial meltdown. This regulatory push highlights the SEC's commitment to tightening its grip on financial institutions and markets.