Pennsylvania Senator Pat Toomey has urged the US Securities and Exchange for more clarity on crypto while presenting the SEC chairman with a list of over two dozen questions regarding the regulation of cryptocurrencies. The Senator has been extremely vocal in asking the SEC for more clarity on crypto.
Flawed Regulatory Strategy
Senator Pat Toomey was critical of the stance taken by the SEC, stating in his letter that for the investors to actually benefit from a competitive marketplace, market regulators must be proactive and provide investors and industry with the rules to be followed. He stated that instead of taking this approach, the SEC had taken an app-based regulatory strategy when it came to the regulation of crypto.
Toomey also stated that while the SEC had taken action against the issuers of digital assets for their failure to register with it as a public securities issuer, it had failed to identify which securities were involved. He stated that the SEC had also failed to justify why they were classified as securities. According to Senator Toomey, clarifying why they were classified as securities would have brought much-needed regulatory clarity for investors.
Stablecoins as Securities
The Pennsylvania Senator also asked Gensler to explain why Stablecoins, which are cryptocurrencies that maintain their value against the Dollar, could qualify as Securities under US law and fall under the jurisdiction of the SEC. Gensler had stated at a hearing earlier this month that he believed Stablecoins could qualify as Securities.
Stablecoins such as Tether and USD Coin have become extremely important assets in the crypto market, as they facilitate the trade between several digital assets.
BTC And Ether As Commodities
Senator Toomey also asked Gary Gensler to clarify why the SEC has classified Bitcoin and Ether as Commodities, despite previous statements describing a majority of digital assets as securities. Toomey also cited a 2018 article from the New York Times, where Gensler had suggested that when Ether was created, it was a security, but it transitioned into a commodity at some point.
Senator Toomey wrote in the letter,
“The concept that [Ether] may switch to a commodity because its development has been more decentralized seems to conflict with your past claims that all ICO tokens are securities. I understand that there are pending court cases that could address this very issue, but as we await decisions in these cases, can you clarify your position as to when a token is sufficiently decentralized in light of your previous statements?”
While both Bitcoin and Ether have got semi-official status as commodities, the SEC has not issued any official guidelines in this respect, and neither has the court.
SEC Under Fire
This is not the first time the SEC and its chairman Gary Gensler have come under fire from Senator Toomey and the Republicans. Senator Toomey was very critical of the approach taken by the SEC against companies that are in the crypto space, with both sparring at Gensler’s appearance at the Senate Banking Committee meeting. Toomey and other GOP lawmakers were critical of Gensler and accused him of stifling innovation and increasing costs for investors.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.