Crypto-friendly United States Senator Cynthia Lummis has filed an amicus brief in support of 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 by a party not directly involved in the case to provide additional arguments and highlight the broader impact of the case. In her filing, Lummis emphasized that the SEC’s lawsuit against Coinbase is not an ordinary enforcement case.
Lummis argued that the SEC’s lawsuit is aimed at obtaining primary influence over the crypto sector, at a time when regulation and related matters are still being actively considered by Congress and multiple agencies. She stated that the Constitution empowers Congress, not the SEC, to legislate in such an area of profound economic and political significance. Lummis also pointed out that most legislative proposals in Congress would grant the authority over crypto asset markets to other agencies, not the SEC. She accused the SEC of attempting to circumvent the political process and exert authority for itself.
Coinbase had previously filed a motion to dismiss the SEC’s lawsuit on August 4, asserting that the regulatory body had violated due process, abused its discretion, and deviated from its own interpretations of the securities laws. In her brief, Lummis criticized the SEC for claiming that nearly all crypto assets are securities, questioning the agency’s regulation-by-enforcement approach. She argued that the SEC’s attempt to incorporate an entire new class of assets into the existing definition of a security exceeds its authority, encroaches on Congress’s lawmaking, and violates the separation of powers.
Lummis is not the only one 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, jointly filed an amicus brief. The Blockchain Association’s senior counsel, Marisa Tashman, echoed Lummis’s arguments, stating that the SEC’s regulatory authority is limited to what Congress granted it. She highlighted the risk of the SEC’s broad interpretation of investment contracts, stating that it could encompass many non-security assets, which was not the intent when Congress granted the SEC authority to regulate securities.
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Tashman also disputed the SEC’s position on digital assets sold on the secondary market, arguing that these transactions do not involve ongoing contractual obligations and, therefore, should not be considered investment contracts under the federal securities laws. She disagreed with the SEC’s claim that nearly all digital assets sold on the secondary market are investment contracts and stated that the SEC’s position is incorrect.
The support from Senator Lummis and various crypto advocacy groups reflects the growing concern among industry players about the SEC’s regulatory approach to the crypto sector. These parties argue that the SEC is overstepping its authority and attempting to legislate through enforcement actions. They believe that matters related to crypto regulation should be addressed through the political process, with Congress taking the lead in legislating on such significant economic and political issues.
As the legal battle between Coinbase and the SEC continues, the outcome will have wider implications for the crypto industry. It will shape the regulatory landscape and determine the extent of the SEC’s authority over crypto assets. The support from Senator Lummis and other crypto advocacy groups strengthens Coinbase’s position and challenges the SEC’s interpretation of the existing securities laws. It remains to be seen how the court will rule on Coinbase’s motion to dismiss and what impact it will have on future regulatory actions targeting the crypto sector.
