Congressman Torres Urged SEC to Drop Crypto ‘Crusade’ After Ripple Legal Battle

Source: AdobeStock / Andriy Blokhin

Congressman Ritchie Torres has asked the US Securities and Exchange Commission provide clear rules for cryptocurrencies instead of “indiscriminately” treating most crypto assets as securities under its purview.

On Tuesday, Torres wrote an open letter to the chairman of the SEC Gary Genslerexpressing his dissatisfaction with the fact that the agency has not issued clear guidance for the cryptocurrency industry.

“Under Chairman Gensler, the SEC has not issued a single rule on crypto assets, nor has it provided any clear guidance,” Torres said.

“All you’ve done is send mixed messages, one after the [other]not only contradicting the CFTC but often contradicting itself.”

The letter came after the presiding judge in the SEC v. Ripple Labs issued a summary ruling ruling that XRP is not a security with respect to programmatic sales on digital asset exchanges.

Torres applauded the ruling, saying the SEC’s enforcement strategy, commonly known as “rule by enforcement,” took a heavy blow in court.

While the district court ruling is not binding outside its jurisdiction and could still be appealed, it sets a precedent that challenges the SEC’s assertion that most digital assets are securities that must be registered.

“Judge Torres has made it very clear to the SEC that digital assets are not securities in the abstract and that he lacks the legal authority to regulate digital assets without tether to an actual offering of securities,” the congressman wrote.

Torres’ letter also highlighted the judge’s criticism of the SEC for failing to provide fair notice to the industry regarding the classification of digital assets as securities.

He noted that under Gensler’s leadership, the SEC has not issued any clear rules or guidance on regulating crypto assets.

SEC Leads Government Crackdown on Crypto

The SEC has been at the forefront of the US government’s efforts to clamp down on the cryptocurrency industry.

Last month, the SEC sued both Binancethe world’s largest cryptocurrency exchange, and coin basethe largest US-based cryptocurrency exchange

The commission has also taken enforcement action against crypto exchanges Kraken and bittrexas well as a crypto lending platform nexus so far this year

However, Torres’ letter adds to the growing disapproval of the agency’s actions.

This criticism follows a similarly scathing assessment by Inspector General Deborah Jeffrey and Comptroller General Gene Dodaro, who have called for an investigation into the SEC’s “rare” approval of cryptocurrency broker-dealer “Prometheum.”

Torres denounced the approval as a mere act of propaganda, designed to create the illusion of regulatory clarity while leaving other companies without a clear path to registration.

However, it remains to be seen how the SEC responds to the recent court ruling.

Speaking at an event hosted by the National Press Club in Washington DC on Monday, Gensler said that while he is “pleased” that the court ruling protects institutional investors by rejecting the so-called fair notice argument in the Ripple case, he is disappointed on behalf of retail investors.

“Although we are disappointed by what they said about retail investors, we are still looking at it and evaluating that opinion,” said Gensler, who led an aggressive crackdown on the cryptocurrency sector during his time as SEC chairman.