Cynthia Lummis filed a so-called “amicus brief” – a document that is typically filed with the court by a party not directly involved in the case – in the U.S. District Court for the Southern District of New York. These documents are typically used to indicate arguments in support of one side of a lawsuit. Lummis said that by accusing Coinbase of violating securities laws, the SEC is seeking to become the primary regulator of the cryptocurrency industry, while the issue is still being vigorously debated in Congress.
According to Lummis, the SEC is bringing enforcement action against cryptocurrency exchanges in the midst of a debate about how cryptoassets should be regulated in the U.S. and around the world. Under the Constitution, it is up to Congress, not the SEC, to legislate for this area of economic and political importance.
“The SEC is seeking to expand its authority over the crypto market, although most legislative proposals in Congress imply that this authority should be given to other agencies. Having failed to satisfy its ambitions, the SEC is trying to circumvent the political process to arrogate that power to itself,” Lummis said.
In early August, Coinbase filed a motion to dismiss the SEC’s lawsuit, arguing that the regulator had abused its power and abandoned its previous interpretation of securities laws. Earlier, it was revealed that SEC Chairman Gary Gensler, while a professor at MIT, did not consider most crypto-assets to be securities.
“The SEC’s attempt to cram a new asset class into the existing definition of securities encroaches on congressional lawmaking and contradicts the principle of separation of powers. The SEC cannot legislate through enforcement,” Lummis added.
Advocacy groups Blockchain Association, Crypto Council for Innovation, Chamber of Progress and Consumer Tech Association also filed a joint complaint accusing the SEC of overreaching its authority. Blockchain Association senior counsel Marisa Tashman emphasized:
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“The SEC takes the view that almost all digital assets sold in the secondary market are investment contracts. But these transactions do not involve ongoing contractual obligations, so the SEC’s position is wrong.”
Recall that in June, Blockchain Association experts prepared a detailed report on Gensler’s activities to remove him from influencing the proceedings.