SNEAK PEEK
- Rep. Torres criticizes SEC’s unclear crypto industry guidance.
- Ripple’s victory clarifies that XRP and token sales aren’t securities.
- Torres Doctrine challenges SEC’s broad regulatory authority over cryptocurrencies.
New York Democrat Ritchie Torres has increased his criticism of the U.S. Securities and Exchange Commission (SEC). The Congressman points to the SEC’s failure to provide clear crypto industry guidance following their loss against Ripple Labs. In his open letter to SEC Chairman Gary Gensler, Torres asserts that regulation by enforcement had a dreadful day in court.
Crypto regulation by enforcement had a dreadful day in court.
In light of the SDNY’s landmark decision in the Ripple case, @SECGov must reassess its reckless regulatory assault on the crypto industry.
My letter to Chair Gensler: pic.twitter.com/Mrk63N4KhH
— Rep. Ritchie Torres (@RepRitchie) July 18, 2023
These remarks echo complaints from industry leaders and fellow Congress members about the SEC’s approach to cryptocurrencies. Per reports, a significant turning point occurred last week when the judge in SEC v. Ripple Lab ruled that XRP, Ripple’s cryptocurrency, isn’t a security. Moreover, the judge declared that token sales on secondary markets like crypto exchanges aren’t securities.
Consequently, Rep. Torres praised the Judge’s application of the Howey Test, a legal benchmark for identifying securities. According to Torres, the SEC has previously haphazardly implemented this test.
As a result, the Congressman highlighted the significance of the judge’s clear statement to the SEC. He emphasized that digital assets are not securities per the abstract, and the SEC lacks the authority to regulate them outside of an actual security offering.
Torres further points out that the odds of the SEC successfully appealing the ruling are minimal. The reason being that certain issues in the case will require detailed fact-finding, which will take time. Accordingly, the precedent set by the judge, now referred to as the “Torres Doctrine,” will hold sway.
Additionally, the Congressman spotlighted the fragile legal basis for the SEC’s lawsuit against Coinbase, which has now collapsed. Earlier, in June, the SEC deemed several leading crypto assets, including Cardano (ADA), Solana (SOL), and Polygon (MATIC), as securities in their case against Coinbase.
As this tumultuous chapter unfolds, Torres eagerly anticipates the SEC’s response. He wonders how the regulatory body will reassess its approach to crypto assets in the face of the newly minted Torres Doctrine.