- SEC’s outdated securities laws clash with blockchain tech; court ruling may set crypto regulatory precedent.
- Coinbase case delay sparks debate: Will courts limit SEC’s power over digital asset exchanges?
- New SEC leadership under Trump appointee could shift crypto enforcement priorities post-Gensler’s departure.
Senator Cynthia Lummis has formally supported Coinbase’s legal challenge against the U.S. Securities and Exchange Commission (SEC). In a January 24 court filing, Lummis argued the SEC is misapplying decades-old securities laws to cryptocurrencies, a move she claims exceeds the agency’s authority.
The senator’s amicus brief, submitted to the Second Circuit Court of Appeals, asserts that Congress—not regulators—should define rules for digital assets.
The SEC’s case against Coinbase hinges on whether certain cryptocurrencies qualify as securities under existing laws. Lummis contends these laws were not designed for blockchain-based assets.
“With lawsuits pending across the country that rely on the SEC’s overzealous interpretation of the securities laws, it is vital that the Second Circuit — the country’s leading securities law court — weigh in now and halt the SEC’s contravention of the separation of powers and encroachment on Congress’s lawmaking powers,” said the amicus brief.
Her filing states that the SEC’s current approach creates regulatory uncertainty, which could stifle growth in the digital asset sector. “The Second Circuit must clarify how securities laws apply to cryptocurrencies” the brief reads. A ruling here could influence pending SEC cases against firms like Ripple and Binance.
On January 7, Judge Katherine Failla paused the SEC’s lawsuit against Coinbase pending the appellate court’s review. If the court sides with Coinbase, the SEC may need to adjust its enforcement strategy. Legal experts note the outcome could set a precedent for how regulators classify tokens and oversee trading platforms.
Lummis, a vocal proponent of crypto-friendly legislation, has long criticized the SEC’s aggressive stance. She argues that Congress must pass tailored laws to govern digital assets.
Her position aligns with industry leaders who claim the SEC’s actions create compliance hurdles without clear guidelines. Meanwhile, the SEC maintains that existing securities laws are sufficient to address fraud and investor risks in crypto markets.
The case unfolds amid leadership changes at the SEC
Former Chair Gary Gensler, who prioritized crypto enforcement, left his post on January 20. President Donald Trump has nominated Paul Atkins, a former SEC commissioner, to lead the agency through June 2026. Until Atkins is confirmed, Commissioner Mark Uyeda will serve as interim chair.
In Congress, Lummis now chairs the Senate subcommittee on digital assets, while Representative Bryan Steil leads a parallel House subcommittee focused on crypto and fintech. These roles position both lawmakers to shape legislation that could redefine oversight of blockchain technologies.
The Second Circuit’s decision will likely determine whether the SEC’s case against Coinbase proceeds. It may also clarify how courts interpret securities laws in crypto contexts—a question with implications for exchanges, developers, and investors. For now, the industry watches closely, awaiting a ruling that could reshape U.S. crypto regulation.