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Coinbase vs. SEC: Crypto Regulation Debate Intensifies as Lummis Accuses SEC of Power Abuse

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Mustafa Mulla

The legal clash between Coinbase and the U.S. Securities and Exchange Commission (SEC) has taken a new turn, with Senator Cynthia Lummis stepping in to support the crypto exchange. She has filed an amicus brief, accusing the SEC of overstepping its authority and bypassing Congress to impose unclear rules on digital assets.

Lummis Stands Up Against SEC’s Actions

On January 24, Senator Lummis filed an amicus brief with the U.S. Court of Appeals for the Second Circuit, siding with Coinbase in its ongoing legal battle with the SEC.

In her filing, Lummis criticized the SEC’s regulatory approach under former Chair gary gensler , calling it opaque and harmful to the separation of powers.

Lummis argues that the SEC has been unfairly reinterpreting existing securities laws without providing clear guidelines, forcing crypto firms to follow new rules without any notice.

Should Congress Control Crypto?

Lummis’s filing strengthens Coinbase’s position, especially regarding the SEC’s use of the Howey Test, a legal standard that determines if an asset is a security. She believes that Congress, not the SEC, should be the one to decide how digital assets are classified and regulated.

Her move comes at a crucial time as the SEC is going through a leadership change. With Mark Uyeda now acting as Chair, there’s speculation that the agency might take a more balanced approach to crypto regulation. Uyeda has already set up a crypto task force to develop a clearer framework, signaling a potential shift in the SEC’s direction.

Nothing Holds Coinbase Back

The SEC sued Coinbase in 2023, accusing the company of acting as an unregistered broker, exchange, and clearinghouse. Coinbase has pushed back, arguing that the SEC’s rules weren’t designed for digital assets and that its actions are inconsistent.

Despite the ongoing legal issues in the U.S., Coinbase continues to expand globally. Recently Coinpedia news reported that the exchange secured a Virtual Asset Service Provider (VASP) license in Argentina, allowing it to legally operate and grow its presence in the region. 

Under Matías Alberti’s leadership, Coinbase is focusing on building a stronger presence in the Latin American crypto market.

Mustafa Mulla

Mustafa has been writing about Blockchain and crypto since many years. He has previous trading experience and has been working in the Fintech industry since 2017.

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