Last Updated: 19 July 2023
New York Representative Ritchie Torres has called on the United States Securities and Exchange Commission (SEC) Chair Gary Gensler to review the regulator’s position on cryptocurrencies after a significant court ruling involving blockchain firm Ripple. In a letter dated July 18, Torres urged the SEC to focus its enforcement efforts on “bonafide bad actors” in the crypto industry rather than treating the majority of crypto assets as securities without discrimination.
The “Torres Doctrine” and Ripple Ruling
The recent court ruling in the SEC’s case against Ripple has raised questions about the classification of cryptocurrencies as securities. The ruling suggested that the XRP token was largely not a security, leading Rep. Torres to refer to the decision as the “Torres Doctrine.” This reference is likely in connection to Judge Analisa Torres, who presided over the SEC v. Ripple case, rather than the lawmaker himself, as he humorously stated that he had “never met a Torres who was wrong on crypto.” Rep. Torres is a member of the Congressional Blockchain Caucus.
SEC’s Approach to Crypto Regulation
In his letter to Chair Gary Gensler, Rep. Torres criticized the SEC’s lack of clarity and guidance on crypto assets under Gensler’s leadership. The SEC has not issued any specific rules or clear guidelines on the regulation of cryptocurrencies, which has resulted in mixed messages from the commission. This ambiguity has not only contradicted the Commodity Futures Trading Commission (CFTC) but also led to inconsistencies within the SEC’s own stances.
Ripple Ruling Implications
Experts believe that a swift appeal to the court decision is unlikely, potentially paving the way for further uncertainties in the SEC’s ongoing cases against other cryptocurrency firms. Notably, the SEC’s lawsuit against the popular cryptocurrency exchange Coinbase, filed in June, could also be affected by the Ripple ruling. The lawsuit against Coinbase alleges that the exchange offered unregistered securities to its users.
Calls for a Revised Regulatory Approach
Rep. Torres stressed the need for the SEC to reconsider its regulatory approach to the crypto industry. He expressed concern that the SEC’s current strategy amounts to a “reckless regulatory assault” on the crypto space. Instead, he urged the commission to target only those entities that genuinely engage in fraudulent activities or act as bad actors in the market.
SEC’s Response and Gensler’s Statement
The SEC Chair, Gary Gensler, expressed disappointment in the court’s decision, emphasizing its potential impact on retail investors. However, the commission has not yet disclosed its specific plans in response to the ruling. The SEC is reportedly still evaluating the situation and considering the appropriate actions it may take in light of the court’s decision.
The recent court ruling in the SEC v. Ripple case has sparked Congressman Ritchie Torres to call for a reconsideration of the SEC’s approach to crypto regulation. As the crypto industry continues to evolve, regulatory clarity and consistency are crucial for fostering innovation while protecting investors. The SEC’s response to the Ripple ruling remains uncertain, leaving stakeholders in the crypto space eagerly awaiting further developments.
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