US Senator Cynthia Lummis is opposing the SEC’s enforcement actions against Coinbase. She believes the SEC is overstepping its legal authority. Lummis has filed an amicus curiae brief in the case Coinbase vs SEC at the US Court of Appeals for the Second Circuit. She calls the SEC’s actions an unlawful power grab.
Lummis criticizes SEC Chair Gary Gensler for aggressive tactics. She claims the SEC is secretly changing laws, like the Howey Test. This test decides if an asset is an investment contract. Lummis argues that the SEC is applying it in ways that Congress did not intend. This forces digital asset exchanges to follow regulations that have not been properly debated or approved.
According to Lummis, only Congress can decide if digital assets are securities or commodities. She warns that the SEC is misusing nearly 100-year-old laws to regulate new technologies. This could hurt the digital asset industry, slow innovation, and create legal confusion.
Lummis believes the SEC’s actions threaten the separation of powers. She notes that Gensler admitted in 2021 that Congress should set the rules for digital assets. However, the SEC continues to expand its influence using outdated laws to regulate a modern industry.
If the court rules in favor of Coinbase, it could clarify the SEC’s regulatory limits. Lummis warns that without intervention, the SEC’s unchecked power could hinder industry growth and create a confusing legal environment for businesses.
Recently, Coinbase won a partial victory against the SEC. The US Court of Appeals stated that the SEC did not provide enough explanation for denying Coinbase’s request for clear regulatory guidelines. This ruling may impact the ongoing case and push the SEC to clarify its stance.
With several lawsuits challenging the SEC’s authority, the outcome of this case could have significant effects.
