The Supreme Court ruling this week limiting the Environmental Protection Agency's authority may have a surprising beneficiary: cryptocurrencies investors who want to avoid federal regulation.
The case before the court was about climate-change regulations from the EPA, but lawyers and lobbyists from unrelated industries were watching it closely to see what the justices might think about the powers of an expanding bureaucracy, especially for new industries likeCryptocurrencies.
There isn't a specific federal law governing them because of the fact that they are so new. In that absence, two regulatory agencies, the Commodity Futures Trading Commission and the Securities and Exchange Commission have taken a lot of steps toward oversight of criptocurrencies.
Jake Chervinsky, head of policy at the Blockchain Association, said in a statement that the Supreme Court won't take kindly to regulatory agencies like the SEC attempting to redraw their jurisdictions beyond what Congress clearly intended. He believes that the Supreme Court would strike down the proposed SEC rules for the market, based on the decision.
Perianne Boring, the founder and CEO of the Chamber of Digital Commerce, said she was encouraged by the ruling, which found that the Clean Air Act does not give the EPA broad authority to regulate greenhouse gas emissions.
She said today that the decision in West Virginia v. EPA should give regulators pause in attempting to set policies that exceed their congressionally mandated roles, particularly with emerging innovations with great economic potential.
In a decision against the EPA, Chief Justice John Roberts wrote for a 6 -- 3 majority that when a government agency wants to regulate an area of significant significance, it needs to point to congressional authorization. For a couple of years, investors have been in a state of suspense as they wait to see how the U.S. government will regulate digital currency, which has grown from almost nothing to a trillion-dollar industry over the past few years, largely without government oversight.
A third industry representative, Sheila Warren, CEO of the Crypto Council for Innovation, said the implications for the digital currency aren't clear.
She said that the SCOTUS is moving toward eroding power of administrative agencies to create and enforce broad rules at the federal level, using the acronym for the Supreme Court of the United States.
It's hard to know how different agencies will respond, she said. I don't think federal agency rulemaking is off the table in the digital assets space, but I do think this ruling will be an indicator that SCOTUS will be a barrier to agencies that are trying to establish broad scale federal policies, especially in areas that states have expressed interest in. James Cox, a Duke University law professor and expert in securities regulation, thinks Thursday s ruling will be the lever to move many regulations off their tracks, including rules for new financial products such as virtual currencies and coin offerings.
Carol Goforth, a law professor at the University of Arkansas, said that the SEC may get the benefit of the doubt from federal courts because of federal laws that give the commission broad authority over investment contracts.
She said in an email that she doesn't think the Court or most federal court judges are too concerned with the SEC's operating too broadly, because of the headlines about criptocurrency fraud.
The CFTC and the SEC didn't respond immediately to requests for comment.