Senator Toomey Challenges Gensler’s View That Almost ‘All Crypto Tokens Are Securities’

SEC Chairman Gary Gensler faced fierce grilling today over the regulator’s role in defining rules for crypto, including the chairman’s view that nearly all cryptocurrencies 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 increasingly frustrated with the SEC’s agenda, and some lawmakers argue that Gensler, who became chairman last year, is exceedance his authority.

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

Regarding the way the SEC has attempted to enforce securities laws as they may apply to crypto, Toomey further suggested that the commission has not been as transparent as it should be. “The problem is that the SEC is not sharing with us the framework they are using,” he said.

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

Such clarity may have helped prevent the catastrophic collapses of several crypto-lending companies earlier this year, causing billions of dollars in losses. Toomey said the SEC did not do enough to help investors when e.g. Celsius and Voyager crashed and went bankrupt earlier this year. Both lenders promised huge returns to customers on their crypto deposits.

Gensler responded to Toomey by saying that many companies have not communicated directly with the SEC about listing and selling tokens and need to come forward and such.

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

The SEC in July reportedly launched a investigation into America’s largest crypto exchange, Coinbase, to see if it has listed unregistered securities.

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