Senator Cynthia Lummis argued that the SEC is attempting to “circumvent the political process” by
establishing itself as the main authority on crypto.
The crypto-friendly United States Senator Cynthia Lummis has filed an amicus brief supporting
Coinbase’s 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 with the related case.
It is generally used to add supporting arguments to one side of the lawsuit and emphasize how
the case will have a broader impact beyond the involved parties.
As per the Aug. 11 filing in the U.S. District Court for the Southern District of New York,
Lummis stressed that “this is no run-of-the-mill enforcement case.”
The senator asserted that with its lawsuit against Coinbase over alleged securities violations,
the SEC is pushing to obtain “primary influence” over the crypto sector at a time when regulation
and other factors are still “under active consideration by Congress and multiple agencies.”
“The SEC brings this enforcement action in the midst of debates in the halls of Congress and
around the world about how crypto assets should be regulated. The Constitution empowers
Congress—not the SEC—to legislate in such an area of profound economic and political significance.”
“Although the SEC seeks broad authority over crypto asset markets, most legislative proposals in
Congress would instead grant much of that authority to other agencies.
Unsatisfied, the SEC seeks to circumvent the political process to commandeer that authority for itself,” she added.
Coinbase filed a motion to dismiss on Aug. 4, arguing that the SEC had “violated due process, abused its discretion, and abandoned its own earlier interpretations of the securities laws” by asserting authority over the exchange.
In the court filing, Lummis went on to argue that the SEC has been overstepping its authority by
claiming that nearly all crypto assets are securities, as she questioned the agency’s supposed
regulation-by-enforcement approach, or what she described as an attempt to “legislate by enforcement.”
“The SEC’s attempt to shoehorn an entire new class of assets into the existing definition of a ‘security,’
and thereby add to the definition enumerated by Congress, exceeds the SEC’s authority, encroaches on
Congress’s lawmaking, and contravenes the separation of powers. The SEC cannot legislate by enforcement.”
Lummis is not alone in filing an amicus brief supporting Coinbase’s motion to dismiss.
On Aug. 11, crypto advocacy groups, including the Blockchain Association, Crypto Council for
Innovation, Chamber of Progress and Consumer Tech Association, also submitted a joint filing.
In an X (formerly Twitter) thread announcing the move, the Blockchain Association’s senior
counsel Marisa Tashman echoed Lummis’ comments that the “SEC’s regulatory authority extends
only to what Congress granted it,” as she highlighted the risks of the SEC’s approach to the sector:
“The SEC’s interpretation threatens to sweep in many non-security assets – this can’t be
what Congress intended when it granted the SEC authority to regulate securities.”
“The SEC takes the position that nearly all digital assets sold on the secondary market are
investment contracts under the federal securities laws. But, these transactions involve no
ongoing contractual obligations. The SEC’s position is wrong,” she added.