Republican attorneys general from more than a dozen states filed a process against the Securities and Exchange Commission, alleging that the agency overstepped its authority by seeking to regulate cryptocurrencies.

The lawsuit is the latest sign of the crypto industry’s growing political influence. President-elect Donald Trump has promise to make the US the “crypto capital of the planet” and to fire SEC Chairman Gary Gensler. The industry poured more than $135 million into federal campaigns during the last election, overwhelming success.

The plaintiffs in the suit against the SEC include the attorneys general of Kentucky, Nebraska, Tennessee, West Virginia, Iowa, Texas, Mississippi, Montana, Arkansas, Ohio, Kansas, Missouri, Indiana, Utah, Louisiana, South Carolina, Oklahoma and Florida. They are joined by the DeFi Education Fund, an advocacy group backed by wealthy crypto investors.

They argue that the SEC’s actions and classifications of cryptocurrencies as investment contracts exceed the agency’s statutory authority and “defy basic principles of federalism and the separation of powers.” Instead, crypto regulation should be left up to the states, the plaintiffs argue.

“The SEC’s claim to expand jurisdiction without congressional authorization deprives states of their proper sovereign role and inhibits the development of innovative regulatory frameworks for the digital asset industry,” according to the complaint. “And worse, by trying to shoehorn digital assets into inappropriate federal securities laws and inadequate disclosure regimes, the SEC is harming the very citizens it purports to protect.”

If the SEC’s alleged overreach isn’t curbed, they say, the agency could suddenly decide that collectible Nike shoes are also securities, and Americans wouldn’t be able to sell their own shoes without registering as brokers.

The SEC has yet to formally respond to the lawsuit, but top agency officials have previously addressed the plaintiffs’ argument that the SEC is not authorized to regulate cryptocurrencies as securities because the statutes empowering the agency do not explicitly mention digital investment vehicles.

Speaking at a symposium on financial regulation earlier this year, then-director of the SEC’s SEC enforcement division, Gurbir Grewal said The Supreme Court had previously set a flexible definition for what constitutes a security and that “whether something is a security depends on the substance of the transaction, not its name, not its form and not the underlying technology”.

He added that “The current turmoil in the cryptocurrency markets is having a real effect on ordinary Americans… (and) the SEC has also argued in a number of our actions that certain unregistered crypto offerings are nothing more than direct waste, Ponzi schemes, affinity frauds. , or other types of scams.”