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New York Democrat Congressman Ritchie Torres doubled down on his recent criticisms of Securities and Exchange Commission (SEC) chair Gary Gensler, accusing the SEC chair of being "intent on sabotaging the industry."
Speaking at the Christie’s auctionhouse’s Art + Tech Summit, Torres reiterated his comparison of Gensler to "an overzealous traffic cop who excessively takes drivers and accuses them of speeding without telling them the speeding limit,” adding that the SEC was engaging in a “regulation by enforcement” approach.
He continued: “if you’re going to accuse me of speeding, you want to tell me the speeding limit.”
While the SEC argues that existing securities laws are an appropriate framework for cryptocurrencies and the path to registration with the regulator is clear, Torres’s words echo a common complaint from the industry that this is not the case, and that no clear guidance has been given.
For the Congressman, Washington's broadly negative stance towards crypto in Washington is "not so much ideological as generational." He argued that, "Congress is something of a gerontocracy,” adding that opinions on emerging technology should play no role in their regulation.
“Our role as policymakers should be to create a framework that protects customers and investors," Torres said, adding that, "It does not fall on us to determine the utility of blockchain technology. That's a judgment only the market can make.”
The Congressman noted that, "there are good actors who are trying to do the right thing who have been the target of these enforcement actions, and have in some cases been driven out of business," arguing that the government and regulators should create an environment in which "entrepreneurs are free to innovate, without facing arbitrary action from the government."
The Torres doctrine
On Tuesday, Ritchie Torres tweeted an open letter to Gensler asking if he “intends to come to terms with the folly of the Commission’s crusade against crypto assets in light of the latest decision by Judge Annalisa Torres of the Southern District of New York.”
The decision referenced by Torres was made last week in the Ripple vs SEC case, which has been ongoing since December 2020. The regulator accuses Ripple of having sold its blockchain’s native XRP token as an unregistered security.
Judge Analisa Torres ruled that XRP "is not necessarily a security on its face” and programmatic sales of XRP to the public did not break securities laws, but some $728 million worth of institutional sales of XRP did qualify as securities offerings because they were sold to buyers who expected to profit in a common enterprise.
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
The judge’s ruling calls into question the SEC’s argument that virtually every cryptocurrency, except Bitcoin, is a security.
Congressman Torres—relishing the fact that the verdict was given by his namesake—hailed Analisa Torres’s verdict as “the Torres doctrine” and said it set a new precedent for future court decisions about crypto.
Gensler expressed his disappointment with the judge's ruling on XRP sales to retail investors, adding that the commission is, “looking at it and assessing that option,” pointing to a possible legal appeal to challenge the ruling. In a sign that the SEC is undeterred from its current approach, Gensler yesterday requested additional funding of $72 million to go after “the Wild West of the crypto market.”
That’s why he’s known as The Sheriff in these parts.