In which various government bodies fight over “permissionless” assets | Illustration by Alex Castro / The Verge

The US Securities and Exchange Commission wants to “unilaterally wrest regulatory authority away from the States” when it comes to crypto, according to a lawsuit from 18 states. These states want to halt the SEC’s enforcement actions, so they can manage crypto regulation instead. Also named as a plaintiff on the suit is the DeFi Education Fund, a special interest lobbyist.

Controversial SEC chair Gary Gensler is named in the suit, along with other SEC commissioners. Gensler’s treatment of crypto during his time as chair has made him a punching bag for the industry — and for Republicans such as president-elect Donald Trump.

There has been an ongoing turf war over crypto regulation. Until this point, the two major contenders were the SEC, and the crypto industry’s preferred regulator, the Commodities Futures and Exchange Commission. Led by Russell Coleman, the attorney general for Kentucky, the states have chosen to Leeroy Jenkins themselves into the fray.

Gensler’s SEC has notched significant wins against the crypto industry — and in multiple court cases, judges have agreed that the SEC does have jurisdiction over crypto. “The SEC’s sweeping assertion of regulatory jurisdiction is untenable,” the lawsuit claims. “The digital assets implicated here are just that — assets, not investment contracts covered by federal securities laws.”

This is both annoying and highly debatable. Coinbase, which is being sued by the SEC, has argued the suit should be dismissed because Coinbase isn’t trading securities. US District Judge Katherine Polk Failla ruled against Coinbase — and the case is proceeding. “The ‘crypto’ nomenclature may be of recent vintage, but the challenged transactions fall comfortably within the framework that courts have used to identify securities for nearly eighty years,” Failla wrote

The states’ suit also argues that a precedent called the major questions doctrine means that the SEC shouldn’t litigate against the crypto industry without Congressional approval. This, too, is highly debatable: judges rejected this line of argument from Terraform Labs and Coinbase.