Senator Pat Toomey of Pennsylvania presented a list of more than two dozen questions about cryptocurrency regulation to US stock exchange chairman Gary Gensler in a letter on Friday, calling on the regulator to clarify its approach to digital assets.
"So that investors can benefit from a fair and competitive market, the regulators of the industry must proactively provide rules for the way," wrote the senior Republican on the Senate Banking Committee. "Unfortunately, the Securities and Exchange Commission (SEC) has adopted a strategy of regulation-through-enforcement in this area instead."
Toomey said the SEC has taken enforcement action against digital asset issuers for failing to register with the agency as a public issuer of securities but failing to identify “the securities concerned or the reasons for their status as securities provided "much needed public regulatory clarity."
The senator asked Gensler to explain why he believes stablecoins or cryptocurrencies should maintain their value in relation to the US dollar
may be classified as securities under US law and thus under the supervision of the SEC, as Gensler said in a hearing earlier this month.
Stablecoins, including tether
and USD coin
have become important tools in the crypto market, making it easier to trade between various digital assets such as bitcoin
"In defining the size of the market that Congress wanted to regulate, Congress has a broad brushstroke," Gensler said during the hearing. "It actually comprised about 35 different things in that definition of a security." Toomey asked Gensler to specify exactly which of these definitions apply to stablecoins.
The Pennsylvania Republican also urged Gensler to explain why the SEC has treated bitcoin and ether as commodities, despite the chairman's earlier statements that the vast majority of digital assets are securities. Toomey pointed to a 2018 article in the New York Times in which Gensler pointed out that ether was a security at the time it was created, but transitioned to commodity status at a later date.
"The concept that (ether) can transition to a commodity because 'its development was more decentralized'" seems to contradict your earlier statements that all ICO tokens are securities, "Toomey wrote. "I understand there are pending lawsuits dealing with this very issue, but while we await decisions on these cases, can you clarify your position as to when a token is sufficiently decentralized given your previous statements?"
The semi-official status of Bitcoin and Ether as commodities – there were no official SEC or court orders in this regard, only legally non-binding statements by former SEC officials – has given the assets enormous advantages over other newer cryptocurrencies, whose issuers have potential claims from the SEC do not register with the agency.