A crypto-friendly legislator believes the Commission's regulation-by-enforcement approach to be ineffective.
According to Senator Pat Tomey, famous for his vocal support for the
crypto industry, the United States Securities and Exchange Commission
(SEC) could have prevented the loss of $12 billion in assets by
investors who trusted Celsius, a crypto lending platform, that froze
their deposits in June.
An official letter
from Toomey to SEC Chairman Gary Gensler, dated by July 26, suggested
that the Commission’s inability to clarify how it would apply existing
securities laws to digital assets and services, drew to undesirable
repercussions. As Toomey writes:
“Companies could have
adjusted product offerings accordingly, preventing investor losses
today, and the SEC would have been free to focus enforcement efforts on
the worst actors.”
According to Toomey, the SEC didn’t
properly explain how the Howey and Reves tests applied to crypto lending
platform products that paid interest to customers making crypto
deposits. Instead, he emphasized, the SEC is choosing to regulate by
selective enforcement.
The senator mentioned the recent insider
trading charges against a former employee of Coinbase, claiming that the
SEC had a clear opinion on the securities’ status of these assets, yet
it did not disclose that view publicly before launching an enforcement
action.
Starting from a dubious presupposition that most digital
assets are securities, he notes, the SEC both makes it difficult for
well-intentioned companies to comply and doesn’t serve great protection
for customers with its regulation-by-enforcement style.
Related: Bitcoin price falls under $21K, bringing more capitulation or just consolidation?
As
a result, the SEC’s continued refusal to give regulatory clarity to the
crypto community, combined with “an apparently sluggish enforcement
pace” harms not investors and innovation in general, according to
Toomey.
In conclusion, Toomey poses nine questions to Gensler with
a request to respond by Aug. 9. Among them are proposition to publicly
identify other major crypto lending companies that hold no registration
under SEC; explain why the Commission has not included 16 out of 25
digital assets traded by the Coinbase employee into its charges, and
others.
On May 10, Toomey revealed his support
for the Stablecoin Innovation and Protection Act, which would allow the
Federal Deposit Insurance Corporation to back stablecoins in a manner
similar to fiat deposits.
source link: https://cointelegraph.com/news/pat-toomey-blames-the-sec-for-crypto-ending-platform-crisis
