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U.S. Senator Joins Crypto Lobbyists in Urging Dismissal of SEC’s Lawsuit Against Coinbase

In a collaborative move, U.S. Senator Cynthia Lummis, along with several crypto lobbying groups and academics, is urging the federal court to dismiss the Securities and Exchange Commission's lawsuit against popular crypto exchange Coinbase.

U.S. Senator Cynthia Lummis
U.S. Senator Cynthia Lummis

Lobby Groups and Senator’s Call to Dismiss the SEC Lawsuit

The Crypto Council for Innovation, Blockchain Association, Chamber of Digital Commerce, and DeFi Education Fund, along with U.S. Senator Cynthia Lummis (R-Wy.), have called on a federal court to dismiss the SEC lawsuit against Coinbase. They filed amicus briefs late Friday, alleging the SEC was attempting to exceed its authority by claiming that crypto trading platforms like Coinbase were operating as unregistered securities exchanges and trading unregistered securities.

Amicus Briefs Mirror Coinbase's Arguments

Addressed to Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York, the amicus briefs echo Coinbase's motion for judgment in dismissing the case. These arguments align with Coinbase's stance that the transactions pointed out by the SEC do not meet the definition of an investment contract and are thus not in violation of securities law.

Widespread Support from Industry and Academia

Various organizations and individuals including the Blockchain Association, Crypto Council for Innovation, Chamber of Digital Commerce, DeFi Education Fund, venture firms like Andreessen Horowitz, and several academics have shown their support by filing six briefs in total, not including the Senator's brief.

Flag of SEC
Flag of SEC

The settlement with Bittrex and SEC's Influence

The amicus briefs were filed just a day after the SEC settled similar charges with Bittrex, a global exchange whose U.S. arm is in bankruptcy proceedings. The brief filed on behalf of Lummis emphasizes the significance of the case in determining the SEC's influence over economic, political, and legal matters.

Recent Precedents and Rejection by Federal Judge

Almost all of the briefs refer to the recent Supreme Court case against the Environment Protection Agency, asserting that regulatory agencies cannot exceed their mandate without Congressional approval. A different federal judge in the same court recently rejected this argument in an SEC case against another crypto platform.

Uncertainty in Congressional Action on Crypto Regulation

The uncertainty of Congress taking swift action on broad crypto regulation adds complexity to the situation. While certain committees have advanced legislation addressing market structure and stablecoin issues, passage through an evenly divided Senate is still uncertain.

Lummis's Brief and Holistic Approach to Crypto Regulation

Senator Lummis's brief points out that she and other lawmakers have introduced several bills outlining the SEC's jurisdiction and the potential role of the Commodity Futures Trading Commission (CFTC). The brief highlights that the crypto industry's unique nature requires a comprehensive approach beyond the scope of a single agency, reflecting global approaches and Congress's awareness of the important considerations at stake.