Senator Cynthia Lummis Accuses US SEC of Overreach In Coinbase Case

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Senator Cynthia Lummis Accuses US SEC of Overreach In Coinbase Case – Crypto News

Published

1 year ago

January 29, 2025

Dripp

Republican Senator Cynthia Lummis of Wyoming has filed an amicus brief supporting Coinbase’s legal battle with the U.S. Securities and Exchange Commission (SEC). The filing was submitted to the U.S. Court of Appeals for the Second Circuit as part of Coinbase’s appeal regarding the SEC’s enforcement action against the exchange.

The SEC had accused Coinbase of operating as an unregistered exchange, broker, and clearing agency.

Senator Cynthia Lummis Says SEC Undermines Congress in Coinbase Lawsuit

In a recent brief, Senator Cynthia Lummis accused the SEC of exceeding its authority under Chair Gary Gensler’s leadership. Lummis argued that the SEC’s enforcement actions undermined Congress’s role in regulating cryptocurrencies. She criticized the agency for reinterpreting securities laws to target digital asset platforms without congressional approval.

Lummis emphasized the importance of Congress in crafting a clear legislative framework for digital assets. She stated that the SEC’s approach to regulation was unconstitutional and violated the separation of powers between the legislative and executive branches.

This move comes just days after Senator Cynthia Lummis was voted to chair the Senate’s Digital Assets Subcommittee. She aims to establish clear rules for cryptocurrencies and integrate Bitcoin into the U.S. financial system. Senator Cynthia Lummis emphasized the need for swift action to maintain the country’s financial innovation and investor protection leadership.

Legal Background of The Case Against Coinbase

The SEC filed a lawsuit against Coinbase in 2023, alleging that the company operated as an unregistered exchange, broker, and clearing agency. The top crypto exchange challenged the lawsuit, claiming the SEC’s enforcement was based on an overbroad interpretation of securities laws. The case was moved to the U.S. Court of Appeals after a lower court allowed Coinbase to appeal.

Senator Cynthia Lummis’s brief argued that the SEC’s tactics were a form of “legislation by enforcement.” She noted that Congress, not the SEC, has the authority to define regulatory boundaries for cryptocurrencies.

However, despite the ongoing SEC lawsuit, the top crypto exchange continues its global expansion. Coinbase secured a VASP license in Argentina, reinforcing its commitment to regulated growth. Matías Alberti will lead operations, aiming to strengthen the platform’s presence in the region.

Judicial Oversight on SEC’s Authority

Additionally, Lummis highlighted the need for the judiciary to intervene in cases involving the SEC’s enforcement of digital asset regulations. She stressed that the Second Circuit Court should provide clarity on when digital assets qualify as securities. This ruling, according to Senator Cynthia Lummis, could have effects on ongoing cases, including lawsuits against other exchanges.

The brief also pointed out that Congress has been working on legislation to address the complexities of regulating digital assets. Senator Cynthia Lummis cited her collaboration with Senator Kirsten Gillibrand on a bill to clarify the roles of the SEC and the Commodity Futures Trading Commission in overseeing cryptocurrencies.

Since the departure of Gary Gensler as SEC Chair, the agency’s stance on crypto regulation is expected to evolve. Acting Chair Mark Uyeda recently announced the creation of a crypto task force aimed at establishing a more balanced regulatory framework.