"Lummis Challenges SEC's Crypto Power Grab in Court"

Senator Cynthia Lummis, a Republican from Wyoming, has filed an amicus brief with the U.S. Court of Appeals for the Second Circuit, challenging the Securities and Exchange Commission's (SEC) regulatory approach to digital assets. The brief supports Coinbase, a cryptocurrency exchange, in its ongoing legal battle with the SEC.

The SEC initiated legal action against Coinbase in 2023, alleging that the company operated as an unregistered broker, exchange, and clearinghouse. Coinbase has contested these allegations, maintaining that traditional securities regulations do not adequately address the unique nature of digital assets.

In her filing, Lummis argued that the SEC, under former Chair Gary Gensler, overstepped its authority by reinterpreting securities laws without proper transparency or consultation. The Wyoming Republican, who now leads the Senate Banking Committee's digital assets panel, emphasized that such interpretations should come from Congress rather than regulatory agencies.

The case has reached a pivotal moment with Judge Katherine Failla ordering a stay on the SEC's proceedings until the Second Circuit Court can review the matter. This decision could have far-reaching effects on other pending SEC enforcement actions, including cases against Ripple Labs and Binance.

Recent changes in SEC leadership have sparked interest across the cryptocurrency industry. Gary Gensler's departure on January 20, 2025, led to Mark Uyeda stepping in as Acting Chair. President Trump has nominated former SEC Commissioner Paul Atkins to complete Gensler's term, which runs through June 2026.

Under Uyeda's interim leadership, the SEC has announced the formation of a dedicated cryptocurrency task force. This new group aims to develop a more practical regulatory framework for digital assets, potentially marking a shift from the agency's previous enforcement-heavy approach.

In her recent court filing, Lummis criticized the SEC's application of the Howey Test, the traditional framework for identifying securities. She argued that this approach has created unnecessary uncertainty for businesses and consumers in the digital asset space.

The Senator's brief specifically challenges the SEC's dual role as both regulator and enforcer. "The SEC cannot act as both lawmaker and enforcer," Lummis stated in her filing, emphasizing the need to maintain proper separation of powers.

The timing of this legal challenge coincides with broader changes in Washington's approach to cryptocurrency regulation. The new