Senator Cynthia Lummis of Wyoming filed a brief supporting Coinbase’s request to dismiss a case against it by the U.S. Securities and Exchange Commission (SEC).
Lummis, a Republican, reiterated her support of the crypto industry by submitting an amicus brief in solidarity with Coinbase.
The company wants a federal judge to dismiss a case brought against it by the SEC for allegedly operating as an unregistered exchange, broker, and clearing house.
Coinbase argues that the regulatory agency overreached its mandate when it sued the exchange for the alleged offenses. In its motion to dismiss, Coinbase stated that transactions on its platform do not involve securities, placing it outside the regulator’s jurisdiction.
Lummis, 68, says the SEC’s approach to crypto enforcement contravenes the separation of powers enshrined in the U.S. Constitution. The agency, she argues, is attempting to legislate laws, which is a function of Congress.
Lummis also accused the SEC of trying to bypass ongoing political processes aimed at crafting regulations for the crypto industry by usurping authority intended for other agencies.
She claimed the agency had twisted the meaning of the phrase “investment contract” found in the Securities Exchange Act of 1934 to give itself regulatory power over digital assets.
The legislator, who is also a member of the Senate Committee on Banking, Housing, and Urban Affairs, insists that the SEC’s interpretation of its role in crypto regulation was “inconsistent” with several pending bills the Committee is considering.
In July, the senator introduced a bipartisan bill co-sponsored by New York lawmaker Kirsten Gillibrand to regulate the crypto space and promote consumer protection. Called the Responsible Financial Innovation Act (RFIA), the bill defines the roles of various agencies in regulating crypto.
The RFIA gives the SEC authority over tokens issued at initial coin offerings (ICOs) since many of them meet the definition of investment contract transactions.
However, it considers underlying crypto assets are commodities and should therefore fall under the purview of the Commodity Futures Trading Commission.
