Senator Pat Toomey Seeks Clarity From SEC Chair Gensler on Crypto Regulation

Republican Senator Pat Toomey recently issued a letter to SEC chairman Gary Gensler regarding cryptocurrency and stablecoins. He attached over 25 questions to the letter, all seeking regulatory clarity on behalf of the industry.

Toomey Demands Clarity From Gensler

Senator Pat Toomey sent the letter today as a follow-up to Gensler’s testimony before the Senate committee on September 14th. At the time, Senator Toomey said that businesses in the industry needed more clarity on what regulators required of them.

“We certainly shouldn’t be taking enforcement action against somebody without having first provided that clarity,” he told the chairman. Gensler disagreed with this statement, saying there’s been “a fair amount of clarity over the years.”

Today’s letter from the senator seeks to establish that clarity directly. He asks Gensler some of the looming questions that exchanges, lenders, and other crypto trading platforms need addressed.

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Toomey begins by reiterating his criticism of Gensler from last week. He said that the SEC has, until now, failed to justify its use of legal pressure in the space.

At the hearing, you noted the SEC’s success in pursuing crypto-related enforcement actions. 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.

He follows by saying that the chairman needs to rely on more than probabilistic estimates. Also, he mentioned other SEC commissioners upset by the SEC’s trouble defining which cryptocurrencies were securities.

The Questions: What Defines A Security?

The senator’s questions for chairman Gensler– attached to the end of the letter– covered topics ranging from stablecoins, to ETPs, to crypto lending services. One of the most pertinent questions is the first one on the list. It asks Gensler to specify “the characteristics that distinguish a cryptocurrency that is a security from one that has been deemed a commodity.”

Toomey also asks the chairman to provide a range of information surrounding the SEC’s previous enforcement actions. These include all exempted orders and no-action letters referencing digital assets in 2021.

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The SEC has been slow in comparison to their Canadian counterparts to provide direct instructions and approvals to crypto platforms. The Canadian Securities Administrators released a precise warning to trading platforms yesterday on best marketing practices, so as to not be litigated.