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Lummis Accuses SEC of Coinbase Overreach

Lummis Accuses SEC of Coinbase Overreach

Crypto Regulation

Wyoming Senator Cynthia Lummis filed an amicus brief supporting Coinbase in its legal challenge against the U.S. Securities and Exchange Commission (SEC). The brief, submitted to the Second Circuit Court of Appeals, contends the SEC's actions against Coinbase exceed its legal mandate.

SEC Accused of Overreach

Senator Lummis argues the SEC, under former Chair Gary Gensler, overstepped its authority by regulating cryptocurrencies without explicit Congressional legislation. She accuses the agency of "legislation by enforcement," reinterpreting securities laws to target digital asset platforms without clear legal basis. This, she claims, violates the separation of powers between the legislative and executive branches.

Congress's Role in Crypto Regulation

Senator Lummis emphasizes Congress's responsibility to establish a clear legal framework for digital assets. She believes the SEC's approach is unconstitutional and that Congress, not the SEC, should define crypto regulations. This stance comes shortly after Senator Lummis was appointed chair of the Senate's Digital Assets Subcommittee, a position where she aims to create crypto guidelines and integrate Bitcoin into the U.S. financial system.

Coinbase Lawsuit Background

The SEC sued Coinbase in 2023, alleging operation as an unregistered exchange, broker, and clearing agency. Coinbase countered by claiming the SEC's application of securities law was excessive. The case is now under appeal after a district court allowed the appeal to proceed.

Global Expansion Continues

Despite the ongoing legal battle, Coinbase continues its global expansion. The exchange recently secured a VASP license in Argentina, highlighting its commitment to growth within a regulated environment. This expansion underscores the company's determination to operate within a regulated framework while navigating the legal complexities of the current regulatory landscape.

Judicial Oversight Needed

Senator Lummis stresses the importance of judicial intervention to clarify the SEC's regulatory authority over digital assets. She believes the Second Circuit's ruling on whether certain digital assets constitute securities will impact numerous ongoing cases involving other exchanges. The need for clear legal definitions and a consistent regulatory approach is central to the Senator's argument.

Legislative Efforts

Senator Lummis highlights ongoing Congressional efforts to address the regulatory uncertainty surrounding cryptocurrencies. She points to her collaboration with Senator Kirsten Gillibrand on a bill aimed at clarifying the jurisdictional boundaries of the SEC and the Commodity Futures Trading Commission (CFTC) concerning crypto assets. This bipartisan cooperation aims to develop a clearer, more consistent approach to the regulation of the crypto markets.

With a new Acting Chair at the SEC, Mark Uyeda, the agency's approach to crypto regulation may evolve. Uyeda recently announced the formation of a crypto task force to develop more reasonable regulations. This shift signals a potential move towards a more collaborative and balanced regulatory framework.

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