Senator Lummis criticized SEC under former Chair for exceeding its authority, saying that crypto regulation should be determined by Congress.
Senator Cynthia Lummis, a Republican from Wyoming, has submitted an amicus curiae brief in support of Coinbase in its legal dispute with the U.S. Securities and Exchange Commission (SEC).
The submission was presented to the United States Court of Appeals for the Second Circuit in relation to Coinbase’s appeal concerning the enforcement action initiated by the U.S. Securities and Exchange Commission against the exchange.
SEC initiated legal action against Coinbase, alleging that the company has been operating an unregistered trading platform, in addition to functioning as an unregistered broker and clearing agency.
Senator Lummis Says SEC Undermines Congress in Coinbase Lawsuit
In a recent statement, Senator Cynthia Lummis expressed her disapproval of the SEC for exceeding its designated authority during the tenure of former Chair Gary Gensler.
As articulated by Lummis, the actions undertaken by the SEC contravene the directives established by Congress regarding the regulation of cryptocurrencies.
She further alleged that the agency is employing its regulatory authority to reinterpret securities legislation and pursue digital asset trading platforms without the necessity of congressional action.
Senator Lummis emphasized that it is the responsibility of Congress to establish a definitive legal framework for the regulation of digital assets through legislative measures.
She asserted that the regulatory approach of the SEC was in violation of constitutional principles. It transgressed the established checks and balances between the legislative and executive branches of government.
This development occurs merely days following Senator Lummis’s election to chair the Senate’s Digital Assets Subcommittee. She aims to establish regulations pertaining to cryptocurrencies and to integrate Bitcoin into the financial system of the United States.
Senator Lummis emphasized the necessity for the nation to take prompt action in order to maintain its preeminent status in financial innovation.
In 2023, SEC initiated legal proceedings against Coinbase, asserting that the company was functioning as an unregistered exchange, merchant, and clearing agency.
The leading cryptocurrency exchange Coinbase has called for the dismissal of the litigation filed by SEC, alleging that the regulator has overstepped its authority in the enforcement of securities legislation.
After the district court authorized Coinbase’s request, they transferred the case to the U.S. Court of Appeals. In her brief, Senator Cynthia Lummis alleged that what the SEC was doing was a form of “legislation by enforcement.”
She emphasized that it is Congress, rather than the United States Securities and Exchange Commission, that possesses the authority to establish regulations pertaining to cryptocurrency.
Despite the Securities and Exchange Commission’s ongoing litigation, Coinbase, the leading cryptocurrency exchange, continues its global expansion efforts.
Coinbase secured a VASP license in Argentina, reinforcing its commitment to regulated growth. Matías Alberti will oversee operations with the objective of enhancing the platform’s presence within the region.
Judicial Oversight on SEC’s Authority
Furthermore, Senator Lummis emphasized the necessity for judicial intervention in matters pertaining to the Securities and Exchange Commission’s enforcement of regulations governing digital assets. She emphasized that the Second Circuit Court ought to elucidate the criteria under which digital assets are classified as securities.
According to Senator Cynthia Lummis, this ruling may have implications for ongoing cases, including litigation involving other exchanges. The memorandum further indicated that Congress is currently formulating legislation to address the prevailing issues.
Senator Cynthia Lummis highlighted her collaboration with Senator Kirsten Gillibrand on legislation aimed at delineating the respective jurisdictions of SEC and CFTC concerning cryptocurrencies.
The departure of Gary Gensler from the position of Chair of SEC is expected to result in a shift in the agency’s regulatory approach toward cryptocurrency.
Mark Uyeda, the acting chair, recently announced the creation of a new cryptocurrency task force to develop equitable regulatory frameworks for the cryptocurrency sector.
