US Senator Calls on SEC Chairman to Provide Regulatory Clarity on Cryptocurrencies

A U.S. senator has asked the chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, to provide clear guidance on cryptocurrency regulation. The senator stated that in many enforcement actions, “the SEC did not identify the securities involved or the rationale for their status as securities, which would have provided much-needed public regulatory clarity.”

Senator Pat Toomey, Ranking Member of the U.S. Senate Committee on Banking, Housing and Urban Affairs, wrote a letter to SEC Chairman Gary Gensler Friday regarding cryptocurrency regulation.

His letter followed Gensler’s testimony before the Senate Banking Committee last week. Toomey began:

I write to follow up on the concerns I expressed at the hearing about the need for regulatory clarity around emerging technologies like cryptocurrencies, including stablecoins.

Noting that “For investors to benefit from a fair and competitive marketplace, regulators must proactively provide rules of the road to industry,” the senator said the SEC “has instead adopted a strategy of regulation-by-enforcement in this area.” So far, the Commission has brought more than 75 enforcement actions on the crypto industry and has imposed fines and penalties totaling more than $2.5 billion on crypto firms and individuals.

At the Senate hearing, Gensler touted “the SEC’s success in pursuing crypto-related enforcement actions.” However, Toomey pointed out that “In many of these enforcement actions, the SEC did not identify the securities involved or the rationale for their status as securities, which would have provided much-needed public regulatory clarity.”

SEC Commissioner Hester Peirce is also concerned about the SEC’s approach to crypto regulation. She criticized her own agency in August for taking an enforcement-centric approach to crypto regulation.

The senator from Pennsylvania noted that the SEC’s approach appears related to Gensler’s belief that “the probability is quite remote” that any given cryptocurrency platform has zero securities. For example, Gensler told Senator Elizabeth Warren at the hearing that the Nasdaq-listed crypto exchange Coinbase (Nasdaq: COIN) may have dozens of tokens that may be securities.

Recently, Coinbase had to drop its plan to launch a lending product after the SEC threatened a lawsuit and the company claimed it received no explanation from the regulator. Meanwhile, the securities watchdog is in an ongoing lawsuit with Ripple Labs and its executives over whether XRP is a security.

Senator Toomey emphasized:

The SEC has a responsibility to do more than just provide probabilistic estimates.

The senator concluded his letter by providing a list of questions he wants Gensler to answer in an effort to obtain additional guidance on crypto regulation.

What do you think about Senator Toomey asking SEC Chairman Gensler to provide clear guidance for crypto regulation? Let us know in the comments section below.