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HomeNewsCoinbase Gets Congressional Support: Lummis Files Brief Against SEC’s Crypto Crackdown

Coinbase Gets Congressional Support: Lummis Files Brief Against SEC’s Crypto Crackdown

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  • Senator Cynthia Lummis has filed an amicus brief supporting Coinbase in its legal battle against the SEC, arguing that the agency is overstepping its authority and creating regulatory uncertainty for digital assets.
  • She urges the court to reinforce congressional oversight, emphasizing that crypto regulations should be crafted by lawmakers rather than imposed through enforcement actions.

The ongoing legal battle between Coinbase and the U.S. Securities and Exchange Commission (SEC) has taken a new turn as Senator Cynthia Lummis filed an amicus brief supporting the crypto exchange. Lummis, a longtime advocate for digital assets, has accused the SEC of exceeding its authority and stifling regulatory clarity by relying on enforcement rather than transparent rulemaking.

Lummis Challenges SEC’s Authority

In her filing with the U.S. Court of Appeals for the Second Circuit, the Wyoming Republican criticized the SEC’s approach under former Chair Gary Gensler. She argued that the agency has overstepped its jurisdiction by reinterpreting securities laws without proper consultation, thereby violating constitutional principles.

“The SEC’s tactics disregard the Constitution’s separation of powers and jeopardize the innovation and growth of digital assets,” Lummis stated in her brief.

The SEC initially sued Coinbase in 2023, alleging that the company functioned as an unregistered broker, exchange, and clearinghouse. However, Coinbase has refuted these allegations, asserting that the agency’s outdated regulations fail to account for the unique characteristics of digital assets. The lawsuit has since become a critical case in shaping the future of cryptocurrency regulation in the U.S.

The Need for Clearer Crypto Regulations

Lummis’ brief highlights the SEC’s inconsistent application of the Howey Test, a legal standard used to determine what constitutes a security. She contends that the SEC’s unpredictable enforcement actions create uncertainty for businesses and consumers, making it difficult for crypto firms to operate within a consistent legal framework.

She further emphasized that such regulatory decisions should be left to Congress, which has the authority to craft tailored legislation that fosters both innovation and consumer protection. Lummis has been a strong proponent of a legislative approach to digital asset regulation and has actively worked to introduce bills that provide clarity for the industry.

A Shift in SEC Leadership and Regulatory Outlook

The amicus brief comes at a time of transition within the SEC, following changes in leadership under the Trump administration. Acting Chair Mark Uyeda has recently signaled a shift in the agency’s priorities, announcing the formation of a crypto task force aimed at developing a more structured and pragmatic regulatory framework.

This shift has sparked optimism within the crypto community, with many hoping for a more balanced approach to oversight. As the new chair of the Senate Banking Committee’s digital assets panel, Lummis has been at the forefront of bipartisan efforts to clarify regulatory responsibilities for digital assets. She co-authored legislation with Senator Kirsten Gillibrand (D-N.Y.) that seeks to establish a clear division of oversight between the SEC and the Commodity Futures Trading Commission (CFTC), while also streamlining compliance requirements for crypto platforms.

The Impact of Lummis’ Brief

With the Coinbase case now before the Second Circuit, Lummis has urged the court to rein in the SEC’s enforcement-driven approach. She argues that the SEC should not function as both the creator and enforcer of regulations, as this undermines the fundamental separation of powers.

“The SEC cannot act as both lawmaker and enforcer,” she stated, emphasizing that this case presents a crucial opportunity to establish a fair and balanced regulatory framework for digital assets.

As the legal battle unfolds, the outcome of this case could have significant implications for the crypto industry, potentially shaping how digital assets are regulated in the U.S. moving forward.

 

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