U.S. Congressman Ritchie Torres has penned a letter to Gary Gensler, Chair of the U.S. Securities and Exchange Commission (SEC), urging a reassessment of the commission’s approach towards cryptocurrencies. This comes in the wake of a recent court ruling in the SEC’s case against Ripple, which has been seen as a landmark decision in the crypto industry.
In his letter, Congressman Torres, who represents New York’s 15th congressional district, expressed his concerns about the SEC’s current stance on cryptocurrencies. He referred to the commission’s approach as a “reckless regulatory assault” and called for a more measured and targeted approach. Specifically, he urged the SEC to focus its enforcement efforts on “bonafide bad actors” who perpetrate serious transgressions like fraud, market manipulation, and the misappropriation of customer funds.
The Congressman’s letter was prompted by last week’s district court ruling by Judge Analisa Torres in the SEC’s case against FinTech firm Ripple. The court’s decision suggested that XRP, the digital asset at the center of the case, was largely not a security, a ruling that Congressman Torres referred to as the “Torres Doctrine.” This term, named after the presiding judge in the case signifies a shift in the legal understanding of cryptocurrencies and their status as securities.
Congressman Torres criticized the SEC for its lack of clear guidance on cryptocurrencies. He pointed out that the SEC has not issued a single rule on crypto assets under Chair Gensler’s leadership. Instead, he wrote, that the SEC has sent mixed messages, often contradicting not only the Commodity Futures Trading Commission (CFTC) but also itself. He also criticized the SEC’s approach of regulation by enforcement, which he described as the opposite of fair notice.
Furthermore, Congressman Torres highlighted the potential impact of the “Torres Doctrine” on the SEC’s ability to regulate digital assets. He suggested that the doctrine could limit the SEC’s authority to regulate digital assets that are not tied to an actual security offering. He also noted that the SEC’s chances of an immediate appeal against the court’s decision are slim due to unresolved issues requiring further fact-finding.