A US Senator is slamming the chairman of the U.S. Securities and Exchange Commission (SEC) for his approach to regulating the digital asset space.
In a new letter addressed to SEC Chair Gary Gensler, Senator Pat Toomey of Pennsylvania says that investors in the new space need clear rules and guidance rather than harsh enforcement and fines.
“For investors to benefit from a fair and competitive marketplace, regulators must proactively provide rules of the road to industry. Unfortunately, the Securities and Exchange Commission (SEC) has instead adopted a strategy of regulation-by-enforcement in this area.”
Toomey adds that during the Senate Banking Committee hearing on September 24th, Gensler said that some crypto assets are deemed as commodities while some are considered securities. The US Senator is now asking Gensler to determine what sets these crypto assets apart.
”Please identify the specific characteristics that distinguish a cryptocurrency that is a security from one that has been deemed a commodity.”
Toomey also asks whether Gensler and the SEC consider stablecoins like Tether (USDT) and USD Coin (USDC) as securities.
“Is it your contention that such a stablecoin constitutes an ‘investment contract’ and is, therefore, a security? If so, could you please explain why you believe such a stablecoin would meet the ‘expectation of profit’ prong of the Howey test?”
The Howey test was established in a Supreme Court case and determines whether certain transactions qualify as investment contracts and are subject to securities laws.
Toomey also says his concerns about the lack of clarity in the regulatory space are shared by others, including big names like SEC Commissioners Hester Peirce and Elad Roisman.
“My concerns about the SEC’s lack of regulatory clarity are shared by others, including SEC commissioners. In one recent enforcement action, SEC Commissioners Hester Peirce and Elad Roisman stated they were ‘disappointed’ by the SEC’s failure to explain which digital assets were securities”
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