A federal judge agreed to suspend an ongoing lawsuit between the 18 state attorney general and a group of distributed financial lobbyists on Wednesday with the U.S. Securities and Exchange Commission (SEC) on Wednesday after the parties focused on the new SEC leader.
All Republicans, state AGS filed a lawsuit with the Defi Education Fund last November after Donald Trump won the 2024 presidential election. They allege that federal securities regulators have exceeded their authority to file lawsuits against crypto exchanges. In filing Wednesday, the SEC suggested that confirmation of Paul Atkins as chairman of the new agency could end the lawsuit.
“In support, the defendant states that a transition in leadership within the Securities and Exchange Commission could lead to the resolution of this case,” the filing said.
The judge ordered the parties to submit a joint status report within 30 days, but suspended all deadlines for 60 days.
Originally, the lawsuit alleged that the SEC enforcement action was invading the ability of state regulators to police digital asset businesses within their own borders.
“For example, some states have implemented regulatory regimes for financial institutions that focus on digital assets, while others have obtained funding licenses and security obligations on digital asset platforms to ensure liquidity,” the lawsuit states.
“While states’ regulatory approaches vary depending on local needs, they have consistently strived to provide clear, manageable rules for roads, and Congress has repeatedly rejected proposals to give federal agencies a broad regulatory power over digital assets.”
Congress is expected to pick up laws in the market structure that could address the role of federal regulators in overseeing crypto this year, and the main committee has already begun hearings.
In the meantime, the SEC has already dropped its investigations and lawsuits to more than a dozen companies, and has suspended lawsuits against several other companies.
Another lawsuit filed by the Blockchain Association against the Internal Revenue Service, the Defi Education Fund, the Texas Blockchain Council and the Blockchain Association were also dropped on Wednesday. The lawsuit alleges that the IRS’ Defi Broker rules exceeded the authority of the agency.
Last week, Trump signed a joint House and Senate resolution under the Congressional Review Act that overturns the rules. This is the first legislative item to address the code he signed as president.
In filing Wednesday, parties said the lawsuit became “controversial” after Trump signed the resolution.