US senators slam SEC’s Coinbase lawsuit, demand clearer crypto regulations

Two U.S. senators have criticized the Securities and Exchange Commission’s (SEC) lawsuit against the biggest American cryptocurrency exchange, Coinbase.

On June 6, the SEC filed a lawsuit stating that Coinbase violated securities laws by operating as an unregistered broker, exchange, clearing agency, and offering unregistered securities via its Staking Program. The regulator also alleged that the exchange provided American investors with unregistered security tokens like ADA, SOL, etc., via its platform.

Senator Lummis says SEC’s approach harms consumers.

In a June 6 statement, Senator Cynthia Lummis stated that the SEC’s regulation by enforcement approach harmed consumers.

Lummis pointed out that the financial regulator had failed to provide a favorable regulatory environment that would allow digital asset exchanges to register and had failed to provide “adequate legal guidance on what differentiates security from a commodity.”

The Senator said:

“Real consumer protection requires creating a robust legal framework that exchanges can comply with, not pushing the industry offshore or into the shadows. This is why Congress needs to pass the Lummis-Gillibrand Responsible Financial Innovation Act.”

Under Chair Gary Gensler, the SEC has consistently urged crypto firms to register with the authorities. However, several crypto stakeholders said the Commission failed to provide a framework for trading these registered tokens.

Senator Lummis is a vocal advocate for the crypto industry and co-authored a bill that provides regulatory clarity for the emerging space with Senator Kirsten Gillibrand.

Senator Hagerty issues warning.

Senator Bill Hagerty said the SEC was weaponizing its role to kill an industry. According to the lawmaker, the financial regulator’s refusal to allow Coinbase to register was indefensible, considering the Commission had approved its public listing.

“Allowing a company to list publicly and then stonewalling their attempts to register is indefensible.”

Hagerty added that the Gensler-led body would “hear from Congress.”

Meanwhile, this is not the first time Senator Hagerty has criticized financial regulators. On March 9, the lawmaker sent a letter to several financial agencies questioning why they were pressuring “financial institutions to cut off services to licensed, legally operating cryptocurrency and digital asset companies.”

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