Coinbase’s Legal Battle Gets Support from U.S. Senator Cynthia Lummis

Coinbase has received backing from Wyoming Senator Cynthia Lummis in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). Lummis, Republican, demonstrated her continued support for the crypto sector by submitting an amicus brief in Coinbase’s favor.

The SEC’s contention revolves around Coinbase allegedly functioning as an unlicensed exchange, broker, and clearing house. In response, Coinbase challenges the SEC’s claims, asserting that its platform transactions aren’t securities-related, thereby placing them outside the regulator’s boundaries.

Senator Lummis took a strong stance against the SEC, arguing that its attempts to regulate the crypto sector breach the U.S. Constitution’s separation of powers principle. Specifically, Lummis believes that the SEC is overstepping its bounds by acting in a legislative capacity, a role designated for Congress. She further criticized the agency for seemingly attempting to sidestep current political efforts to establish clear crypto regulations, accusing the SEC of overextending its reach into areas meant for other regulatory bodies.

One point of contention is the SEC’s interpretation of the term “investment contract” as outlined in the Securities Exchange Act of 1934. Lummis claims the SEC has inappropriately expanded this definition to exert control over digital currencies.

Highlighting her dedication to the crypto realm, Lummis noted her involvement in the Senate Committee on Banking, Housing, and Urban Affairs. She underscored the inconsistency between the SEC’s viewpoint and several bills the Committee is presently examining.

Furthermore, Lummis and New York Senator Kirsten Gillibrand have jointly introduced bill, the Responsible Financial Innovation Act (RFIA). This proposed legislation seeks to clarify the regulatory landscape for cryptocurrencies. While it assigns oversight of tokens from initial coin offerings (ICOs) to the SEC, the RFIA categorizes base crypto assets as commodities, suggesting their regulation falls under the Commodity Futures Trading Commission’s domain.