Key Republicans in Washington are calling on the Securities and Exchange Commission to provide additional guidance on how cryptocurrencies are regulated.
"For investors to benefit from a fair and competitive marketplace, federal agencies should answer questions about whether — and if so, how — new and emerging technologies fit under existing regulations," said Sen. Pat Toomey, R-Pa. in a statement Friday. Mr. Toomey said SEC Chairman Gary Gensler's "failure to provide clear rules of the road for cryptocurrencies underscores the need for Congress to act."
Following a Senate Banking Committee hearing in September during which Mr. Gensler testified, Mr. Toomey, the committee's ranking member, sent written follow-up questions and published Mr. Gensler's responses Friday.
Mr. Toomey had asked for the "specific characteristics that distinguish a cryptocurrency that is a security from one that has been deemed a commodity," but Mr. Gensler said it's not black and white. It "depends upon the particular facts and circumstances, whether any particular financial instrument, including a crypto asset, is being offered or sold as a security," Mr. Gensler responded.
Later in his written response, Mr. Gensler reiterated a point he's made publicly in the past: that the SEC would benefit from additional regulatory authority over crypto trading and lending platforms. "I have asked SEC staff, working with our fellow regulators, to work along two tracks," Mr. Gensler said. "First, I have asked them how we can work with other regulators under our current authorities to best bring investor protection to these markets. Second, I've asked them what gaps we might need Congress's assistance to fill."
Crypto regulation was also discussed Thursday at the SEC's Investor Advisory Committee meeting. SEC Commissioner Hester M. Peirce, a Republican and crypto proponent, said in prepared remarks before the committee that the SEC has not "provided clarity in response to repeated questions on crypto from reputable players, but has instead embraced an approach that has been described aptly to me as 'strategic ambiguity.' Such an approach facilitates enforcement actions, but it is costly and treacherous for well-intentioned developers and their lawyers."
Mr. Toomey made a similar point in his letter to Mr. Gensler: "For investors to benefit from a fair and competitive marketplace, regulators must proactively provide rules of the road to industry. Unfortunately, the Securities and Exchange Commission has instead adopted a strategy of regulation-by-enforcement in this area," Mr. Toomey said.