Pat Toomey blames SEC for crypto lending platform crisis
Pro-crypto lawmaker finds Commission's rule-by-app approach ineffective.
New
Senator Pat Tomey, famous for his vocal support of the crypto industry, says the U.S. Securities and Exchange Commission (SEC) could have prevented investors from losing $12 billion in assets who trusted Celsius, a crypto lending platform, which froze their deposits in June.
An official letter from Toomey to SEC Chairman Gary Gensler, dated July 26, suggested that the Commission's failure to clarify how it would apply existing securities laws to digital assets and services would have undesirable repercussions. As Toomey writes:
"Companies could have adjusted their product offerings accordingly, avoiding investor losses today, and the SEC would have been free to focus its enforcement efforts on the worst performers."
According to Toomey, the SEC failed to properly explain how the Howey and Reves tests applied to crypto lending platform products that paid interest to clients making crypto deposits. Instead, he pointed out, the SEC chooses to regulate through selective enforcement.
The senator mentioned the recent insider trading charges against a former Coinbase employee, saying the SEC had a clear opinion on the status of the securities of those assets, but it did not publicly disclose that opinion until to initiate legal action.
Based on a dubious assumption that most digital assets are securities, he notes, the SEC both makes it harder for well-meaning companies to comply and doesn't protect customers very well with its style of regulation by application.< /p>
Related: Bitcoin Price Falls Below $21,000 Leading to Further Capitulation or Just Consolidation?
As a result, the SEC's continued refusal to provide regulatory clarity to the crypto community, combined with "an appearance...
Pro-crypto lawmaker finds Commission's rule-by-app approach ineffective.
New
Senator Pat Tomey, famous for his vocal support of the crypto industry, says the U.S. Securities and Exchange Commission (SEC) could have prevented investors from losing $12 billion in assets who trusted Celsius, a crypto lending platform, which froze their deposits in June.
An official letter from Toomey to SEC Chairman Gary Gensler, dated July 26, suggested that the Commission's failure to clarify how it would apply existing securities laws to digital assets and services would have undesirable repercussions. As Toomey writes:
"Companies could have adjusted their product offerings accordingly, avoiding investor losses today, and the SEC would have been free to focus its enforcement efforts on the worst performers."
According to Toomey, the SEC failed to properly explain how the Howey and Reves tests applied to crypto lending platform products that paid interest to clients making crypto deposits. Instead, he pointed out, the SEC chooses to regulate through selective enforcement.
The senator mentioned the recent insider trading charges against a former Coinbase employee, saying the SEC had a clear opinion on the status of the securities of those assets, but it did not publicly disclose that opinion until to initiate legal action.
Based on a dubious assumption that most digital assets are securities, he notes, the SEC both makes it harder for well-meaning companies to comply and doesn't protect customers very well with its style of regulation by application.< /p>
Related: Bitcoin Price Falls Below $21,000 Leading to Further Capitulation or Just Consolidation?
As a result, the SEC's continued refusal to provide regulatory clarity to the crypto community, combined with "an appearance...
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