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- Arkansas requested that federal appellate judges dissolve an injunction halting enforcement of digital asset mining rules on Oct. 20.
- Circuit Judge James Loken scrutinized the wide scope of the order because it freezes regulations beyond foreign ownership limits.
- The state asserted its right to protect public welfare and manage property ownership through permitting systems that safeguard local utilities.
Arkansas asked federal appeals judges on Oct. 20 to lift an injunction preventing officials from enforcing crypto-mining legislation that restricts certain foreign ownership. The appeal could determine whether Arkansas can enforce mining permit requirements while the challenge to its foreign-ownership restrictions continues.
Loken Questions Scope of Mining Injunction
U.S. Circuit Judge James Loken challenged the breadth of the order, which blocks enforcement of Act 174 and the Arkansas Oil and Gas Commission’s related Rule K. The legislation covers mining permits as well as ownership restrictions.
Loken questioned whether an injunction reaching beyond the disputed ownership provisions should remain in place:
“If the injunction is overbroad, it shouldn’t stay in effect.”
Arkansas argued that any relief should be limited to the challenged provisions and parties before the court.
Arkansas Defends State Authority Over Mining
Act 174, passed in 2024, prohibits certain foreign parties from holding an interest in digital asset mining businesses. Its restrictions cover people and entities linked to countries subject to federal arms-export controls, including China.
The law also creates a state permitting system administered by the Oil and Gas Commission. Rule K requires applicants to certify compliance with the foreign-ownership restrictions.
Joseph Nelson, an attorney representing Arkansas, argued that regulating property ownership and protecting public welfare fall within the state’s authority. He defended the legislation’s utility protections:
“These laws ensure that crypto mining facilities will not strain local utilities.”
The state maintained that federal restrictions on foreign investment leave room for Arkansas to impose its own safeguards.
Mining Association Challenges Foreign-Investment Limits
The Arkansas Cryptomining Association argues that the state has stepped into foreign affairs and national security policy reserved for the federal government.
The dispute concerns the federal foreign-investment review process involving the Committee on Foreign Investment in the United States, known as CFIUS. The association also objects to restrictions reaching small investments that would not necessarily trigger federal review.
Chief U.S. District Judge Kristine G. Baker granted the association a preliminary injunction on April 29, 2025, finding it likely to prevail on its claim that federal law overrides the state restrictions.
Baker found that Arkansas’ blanket prohibitions could prevent investments that federal officials might approve. She also found that the restrictions reached transactions and people Congress had chosen not to subject to heightened national security review.
Baker Found Ownership and Permit Rules Inseparable
Baker’s order stopped Commission Director Alan York, Attorney General Tim Griffin and those acting with them from enforcing any provision of Act 174 or Rule K while the litigation continues. Its reach therefore extends beyond the disputed ownership restrictions to the permitting system.
The district court concluded that the permitting requirements depended on the ownership provisions and could not be separated without departing from the legislature’s intent. Act 174 also contains no clause expressly allowing the remaining provisions to survive if part of the law is struck down.
