Lummis submits amicus brief opposing SEC overreach in Second Circuit

U.S. Senator Cynthia Lummis recently submitted an amicus curiae brief on January 24, 2025, addressing the ongoing Coinbase v. Securities and Exchange Commission case in the U.S. Court of Appeals for the Second Circuit. In her filing, she strongly criticized the Securities and Exchange Commission’s (SEC) approach under former Chair Gary Gensler and the Biden Administration. Lummis highlighted the agency’s strategy of trying to redefine established legal principles like the Howey test and investment contracts, all while keeping these reinterpretations undisclosed and then using them to compel compliance from digital asset exchanges. She deemed this tactic as un-American and emphasized the need for Congress to establish a clear legislative framework that distinguishes between securities and commodities.

Lummis emphasized that it is essential for Congress to play a central role in defining the boundaries between different types of financial assets, rather than leaving it to the SEC to develop such distinctions through enforcement actions. She stressed the importance of a transparent and predictable regulatory environment for digital assets to thrive and for market participants to operate with clarity and certainty regarding the regulatory requirements governing their activities. By providing a stable legislative framework, Congress can ensure that businesses have clear guidelines to follow, eliminating the need for regulatory guesswork and ad-hoc enforcement actions that may stifle innovation and investment in the digital asset space.

The Senator’s amicus brief challenges the SEC’s overreach in using enforcement actions as a means to shape policy outcomes, rather than allowing Congress to establish clear rules and guidelines for the industry. By exerting influence through enforcement rather than formal rulemaking, the SEC risks creating uncertainty and unpredictability for market participants, potentially hindering the growth of the digital asset sector in the United States. Lummis contends that a collaborative approach between Congress, regulatory agencies, and industry stakeholders is essential to foster innovation and investment in the digital asset space while maintaining regulatory oversight to protect investors and ensure market integrity.

Lummis’ filing in the Coinbase case signals her commitment to advocating for regulatory clarity and certainty in the digital asset ecosystem. By pushing back against the SEC’s enforcement-driven approach, she aims to promote a more principled and transparent regulatory environment that supports innovation, investment, and responsible market behavior. The amicus brief underscores the importance of a legislative framework that provides clear distinctions and guidelines for different types of financial assets, ensuring that market participants can operate with confidence and compliance in the evolving digital asset landscape.