U.S. Senator Cynthia Lummis has made a notable legal intervention by entering the legal fray between Coinbase and the SEC. She submitted an amicus curiae brief to the U.S. Court of Appeals for the Second Circuit.
Lummis is challenging what she views as the SEC’s enforcement-oriented approach to regulation. She is voicing concerns about the agency’s regulatory actions during the current administration.
The case at hand revolves around accusations by the SEC that Coinbase has been running an unregistered trading platform, acting as a broker, and serving as a clearing agency.
Senator’s Critical Stand Against SEC
Senator Cynthia Lummis, in her recent filing, argued that the SEC had exceeded its jurisdiction under former Chair Gary Gensler. She claimed that the SEC’s tough stance on cryptocurrency regulation conflicted with the legislative intentions of Congress.
She accused the agency of altering securities laws to target digital asset platforms without appropriate legislative support.
Lummis stressed that such regulatory actions jeopardize the crypto sector and raise red flags about the SEC’s independent enforcement of policies without Congress’ approval.
On X (previously Twitter), she expressed,
“The SEC, under the Biden administration, has aggressively reinterpreted case law on Howey and investment contracts, kept these interpretations undisclosed, and then compelled compliance from digital asset exchanges.”
She further remarked,
“This approach goes against American values. It is Congress’ responsibility to establish a legislative framework that clearly distinguishes between securities and commodities.”
Additional Insights
Lummis argued that the SEC’s actions disrupted the checks and balances between the legislative and executive branches, sidestepping the role of lawmakers.
Interestingly, her comments follow her recent appointment to chair the Senate’s Digital Assets Subcommittee.
She aims to establish clear guidelines for cryptocurrency regulation and incorporate Bitcoin [BTC] into the U.S. financial system.
While Coinbase continues its global expansion amid the legal standoff with the SEC, it has recently obtained a VASP license in Argentina to demonstrate adherence to regulatory standards.
Gensler’s Transition
This development aligns with former SEC Chair Gary Gensler’s return to academia at MIT Sloan School of Management, where he will focus on AI, finance, and public policy.
His exit from the SEC signifies a leadership change, leaving the future of crypto regulation uncertain but potentially favorable given Trump’s supportive stance on cryptocurrencies.