Senator Lummis Challenges SEC's Crypto Regulation: "Un-American" Legislation-by-Enforcement

U.S. Senator Cynthia Lummis has taken a stand against the Securities and Exchange Commission's (SEC) regulatory approach in the crypto industry, filing an amicus curiae brief in the U.S. Court of Appeals for the Second Circuit. The brief challenges the SEC's "legislation-by-enforcement" strategy, which Lummis argues oversteps the agency's authority and undermines the crypto industry.

Lummis' intervention comes amidst the ongoing legal battle between the SEC and Coinbase, with the agency alleging that the crypto exchange has been operating an unregistered trading platform, broker, and clearing agency. In her brief, Lummis asserts that the SEC's aggressive stance on crypto regulation contradicts Congress's intended framework and reshapes securities laws to target digital asset platforms without proper legislative backing.

Taking to social media, Lummis criticized the SEC's approach under the Biden administration, stating that the agency has been aggressively reinterpretating case law governing investment contracts and demanding compliance from digital asset exchanges without providing clear guidelines. She emphasized that such an approach is "un-American" and that it is the job of Congress to provide a legislative framework that clearly draws the line between a security and a commodity.

Lummis' remarks come just days after she was appointed to lead the Senate's Digital Assets Subcommittee. In this role, she aims to set definitive guidelines for cryptocurrency regulation and integrate Bitcoin into the U.S. financial system. Despite the ongoing legal battle with the SEC, Coinbase remains committed to global expansion and regulatory compliance, recently securing a VASP license in Argentina.

This development also coincides with former SEC Chair Gary Gensler's return to academia at MIT Sloan School of Management, where he will focus on artificial intelligence, finance, and public policy.