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The Arkansas Cryptomining Association is suing two Arkansas state officials, arguing that they enforced an unconstitutional and discriminatory state rule prohibiting foreign-born American citizens from engaging in crypto-mining activities, among other things.

The complaint was made against Arkansas Attorney General Tim Griffin and the director of the Arkansas Oil and Gas Commission, Lawrence Bengal, on March 13 in the US District Court Eastern District of Arkansas. 

It follows a federal court ruling last November that temporarily barred Arkansas from preventing a naturalized US citizen of Chinese descent from operating a crypto mining business.

The Arkansas state rules concerned are “Rule K” and “Act 174,” which prohibits foreign-party controlled businesses in the state.

Director Connor L. Kempton of the Arkansas Cryptomining Association said the vagueness of Rule K and Act 174 gives the defendants arbitrary and discriminatory enforcement powers, enabling them to grant or deny permits at their own discretion.

He said the application of Rule K and Act 174 is unconstitutional and can be discriminatory based on race, alienage and national origin, among other things.

Kempton noted that these rules were enforced against crypto mining firm Jones Eagle LLC, which is run by Qimin “Jimmy” Chen, a naturalized US citizen of Chinese origin.

Kempton specifically pointed to the Equal Protection Clause of the 14th Amendment of the US Constitution in arguing the illegality of Rule K and Act 174.

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The Equal Protection Clause similarly prohibits the US states from denying any person equal protection of the laws based on the person’s race, alienage or national origin. 

The crypto mining executive also argued that Rule K and Act 174 strip American citizens like Chen of due process rights under the 14th Amendment.

Kempton also said the prohibitions and penalties imposed under Act 174 infringe on the federal government’s authority to investigate, review and take action on foreign investments.

“Act 174 seeks to establish Arkansas’s own foreign policy, thereby intruding upon the federal government’s exclusive power to govern foreign affairs.”

District Court Judge Kristine G. Baker said on Dec. 9 that the Arkansas state officials were barred from enforcing Act 174 against Jones Eagle until further notice.

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US state Vermont has dropped its “show cause order” against crypto exchange Coinbase for allegedly offering unregistered securities to users through a staking service.

Vermont’s Department of Financial Regulation said in a March 13 order that in light of the US Securities and Exchange Commission tossing out its case on Feb. 28, it would follow suit and rescind its action against Coinbase without prejudice.

“The SEC has announced the formation of a new task force to, among other things, provide guidance for the promulgation of rules regarding the regulation of cryptocurrency products and services,” the department said.

“In light of the dismissal of the Federal Action and likelihood of new federal regulatory guidance, the Division believes it would be most efficient and in the best interests of justice to rescind the pending Show Cause Order, without prejudice.”

On the same day the SEC filed its lawsuit in June 2023, the US states of Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin said they were launching legal proceedings against Coinbase.

The show cause order asserted that Coinbase was violating securities laws by offering staking to its users without a license and demanded the exchange provide a reason why the courts shouldn’t hit them with an order directing them to halt the service. 

Now that Vermont has opted out, Coinbase chief legal officer Paul Grewal said in a March 13 statement to X that the other states with staking actions should take a “page from Vermont’s playbook.”

“As we have always said: staking services are not securities. We applaud Vermont for embracing progress and providing clarity for its citizens who own digital assets,” he said.

“Our work isn’t over. Congress must seize the bipartisan momentum we’re seeing across the House and Senate to pass comprehensive legislation that takes into account the novel features of digital assets, such as staking,” he added.

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A growing number of firms facing legal action from the SEC have had their cases dismissed in the wake of former SEC Chair Gary Gensler, who took a hardline stance toward crypto, resigning on Jan. 20.

Crypto trading firm Cumberland DRW was among the latest to have its case dropped on March 4, while the regulator is reportedly wrapping up its enforcement action against Ripple Labs after more than four years.

Grewal has also launched a request under the Freedom of Information Act to find out how many enforcement actions were brought against crypto firms under Gensler’s tenure between April 17, 2021, and Jan. 20, 2025, and the cost to the taxpayer. 

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Bloomberg ETF analyst James Seyffart believes the next phase of adoption for crypto exchange-traded funds (ETFs) will be driven by financial advisers, wirehouses, and brokers managing assets for high-net-worth individuals. Speaking on the “Coin Stories” podcast, Seyffart outlined how these financial institutions, which oversee trillions of dollars in assets, could play a central role in […]

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