US Senator Cynthia Lummis, who represents Coinbase against the Securities and Exchange Commission in the ongoing litigation between the two agencies, has submitted an amicus curiae brief. The agency is accused of abusing its powers and interfering with congressional oversight.
The Wyoming Republican, a long-time advocate for crypto, described the SEC’s enforcement-driven regulatory strategy as a violation of constitutional principles.
Amicus short
In her filing with the US Court of Appeals for the Second Circuit, Lummis criticized the SEC’s approach under former Chair Gary Gensler, which she said involved reinterpreting securities laws without transparency or consultation.
Lummis
“The SEC’s tactics disregard the Constitution’s separation of powers and jeopardize the innovation and growth of digital assets.”
Coinbase was sued by the SEC in 2023 on grounds that they were not registered as a clearinghouse or exchange. However, the exchange has contested these claims, asserting that the agency’s regulations are ill-suited for the unique characteristics of digital assets.
This case is a milestone in the US legal system’s treatment of cryptocurrencies. Lummis’ brief contends that the SEC has inconsistently applied the Howey Test, a legal framework for defining securities, creating regulatory uncertainty for businesses and consumers.
She stressed that Congress should be left in charge of drafting laws to balance consumer protection with innovation.
Changing guard
Mark Uyeda is the acting chair of the SEC, and he has announced a new set of priorities. Uyeda has recently announced that a task force on crypto will be formed to help create a pragmatic regulatory environment.
The news has given crypto supporters hope that the agency will adopt a more cooperative stance. Lummis, who now leads the Senate Banking Committee’s digital assets panel, has long championed bipartisan efforts to clarify regulatory oversight for crypto.
Her legislation, co-authored by Senator Kirsten Gillianbrand (D.Y.), proposes a better division of responsibilities among the SEC and Commodity Futures Trading Commission. It also attempts to provide clarity in the crypto industry by streamlining compliance for platforms.
With the Coinbase case now before the Second Circuit, Lummis has urged the court to curb the SEC’s enforcement-led approach. She urged judges to enforce the separation between powers, ensuring that decisions made by regulatory agencies reflect legislation and do not go beyond its intended purpose.
Lummis, according to:
“The SEC cannot act as both lawmaker and enforcer.”
Further, she argued that Coinbase’s case offers an opportunity for establishing a framework more balanced in digital assets.
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