Crypto-friendly Senator Cynthia Lummis has filed an Amicus Brief supporting Coinbase in its motion to dismiss the U.S. Securities and Exchange Commission’s (SEC) lawsuit against the firm. An Amicus Brief is a document filed in court by a party not directly involved in the case to provide supporting arguments. Lummis emphasized that the SEC’s lawsuit against Coinbase is not an ordinary enforcement case.
Lummis argued that the SEC’s lawsuit is an attempt to gain primary influence over the crypto sector when regulation and related factors are still under active consideration by Congress and multiple agencies. She stated that the Constitution empowers Congress, not the SEC, to legislate in such a significant area. Despite most legislative proposals granting authority over crypto asset markets to other agencies, the SEC seeks to commandeer that authority for itself, bypassing the political process.
Coinbase filed a motion to dismiss on the grounds that the SEC violated due process, abused its discretion, and abandoned its own interpretations of securities laws. Lummis further criticized the SEC for claiming that nearly all crypto assets are securities and adopting a regulation-by-enforcement approach. She argued that the SEC’s attempt to add to the definition of securities exceeds its authority, encroaches on Congress’s lawmaking, and contravenes the separation of powers.
Lummis is not alone in supporting Coinbase’s motion to dismiss. On August 11, several crypto advocacy groups, including the Blockchain Association, Crypto Council for Innovation, Chamber of Progress, and Consumer Tech Association, submitted a joint filing. The Blockchain Association’s senior counsel echoed Lummis’ comments, highlighting that the SEC’s regulatory authority extends only to what Congress granted it. She emphasized that the SEC’s interpretation threatens to include non-security assets, contradicting Congress’s intention when granting regulatory authority.
The SEC considers nearly all digital assets sold on the secondary market as investment contracts under federal securities laws. However, the joint filing argues that these transactions involve no ongoing contractual obligations, making the SEC’s position incorrect. The filing asserts that the major questions doctrine precludes the SEC from enforcing its interpretation of “investment contract.”
Senator Lummis and the crypto advocacy groups’ support for Coinbase’s motion to dismiss reflect the ongoing debates surrounding crypto asset regulation. It is crucial to determine the appropriate regulatory framework for this emerging industry, and Lummis and others are highlighting the need for legislative action rather than enforcement-led regulation. The outcome of this case will play a crucial role in shaping the future of crypto regulation in the United States.
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