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.
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.
