Senator Toomey challenges Gensler’s view that almost “all crypto tokens are securities”

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SEC Chairman Gary Gensler faced fierce discussion today over the regulator’s role in setting the rules for crypto, including the chairman’s view that nearly all crypto -Currencies currently traded today are likely unregistered securities.

During a Thursday oversight hearing of the agency by the Senate Banking Committee, Republican Sen. Pat Toomey suggested the SEC was not doing its job well enough.

Republicans are growing frustrated with the SEC’s agenda, with some lawmakers saying Gensler, who became president last year, is override his authority.

“Unfortunately, some of the SEC’s recent actions and inactions have raised concerns about how it is carrying out this important mission. [protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation],” he said.

Regarding how the SEC has attempted to apply securities laws as they might apply to crypto, Toomey further suggested that the Commission has not been as transparent as it should be. “The problem is that the SEC doesn’t share with us the framework they use,” he said.

“Gary Gensler famously argues that virtually all crypto tokens are securities. I think reasonable people might disagree with that. he would exempt Bitcoin of this classification,” continued the senator. Toomey said Congress might need to step in and provide a clear framework for crypto investors and entrepreneurs, but the SEC should provide “much more clarity” in the meantime.

Such clarity may have helped prevent the disastrous collapses of several crypto lending companies earlier this year, causing billions of dollars in losses. Toomey said the SEC isn’t doing enough to help investors when, for example, Celsius and Traveler crashed and went bankrupt earlier this year. Both lenders promised huge returns to customers on their crypto deposits.

Gensler responded to Toomey saying that many companies have not communicated directly with the SEC about the token listing and sale and need to come forward, etc.

Gensler added that it was important to have “a cop on the beat” regulating cryptocurrency.

The SEC would have launched in July a investigation in the largest US crypto exchange, Coinbase, to see if it listed any unregistered securities.

Gensler has said previously, and today reconfirmed, the SEC’s position is that most cryptocurrencies are securities. The SEC chief said he believed Bitcoin was an exception and not a security, but declined to comment on any other specific coin, including Ethereum.

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