In a recent development in the ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and Coinbase, a leading cryptocurrency exchange, U.S. Senator Cynthia Lummis and several crypto industry groups have filed amicus briefs in support of Coinbase’s motion to dismiss the SEC’s lawsuit.
The SEC filed a lawsuit against Coinbase in September 2021, alleging that the exchange violated securities laws by offering a lending product called Coinbase Lend, which would allow users to earn interest on their crypto holdings. The SEC claimed that the lending product involved the sale of unregistered securities, namely the stablecoin USDC, which is pegged to the U.S. dollar, reports Bitcoin World.
Coinbase denies allegations
Coinbase denied the allegations and argued that the SEC failed to provide clear guidance on how it regulates crypto products and services. Coinbase also accused the SEC of engaging in “regulation by litigation” and creating a “chilling effect” on innovation in the crypto space.
In October 2021, Coinbase filed a motion to dismiss the SEC’s lawsuit, asserting that the lending product did not involve any securities transactions and that the SEC lacked jurisdiction and standing to sue the exchange.
On November 15, 2021, U.S. Senator Cynthia Lummis, a Republican from Wyoming and a vocal advocate for crypto regulation, filed an amicus brief in support of Coinbase’s motion to dismiss. In her brief, Lummis argued that the SEC’s lawsuit was “arbitrary and capricious” and that it violated the due process rights of Coinbase and its customers. She also urged the court to adopt a “functional approach” to determine whether a crypto asset is a security or not, based on its economic substance rather than its legal form.
Crypto lobbyists
Lummis was joined by several crypto industry groups, including the Blockchain Association, Coin Center, the Chamber of Digital Commerce, and the Association for Digital Asset Markets. These groups also filed amicus briefs in favor of Coinbase, echoing Lummis’ arguments and highlighting the need for regulatory clarity and certainty for the crypto sector.
The court has not yet ruled on Coinbase’s motion to dismiss. The case is expected to have significant implications for the future of crypto regulation in the U.S. and beyond.
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