Congressman Ritchie Torres of New York’s 15th District applauded the court’s decision in the Ripple vs. SEC lawsuit and took the opportunity to criticize the Securities and Exchange Commission (SEC) for its lack of clear guidance for the cryptocurrency industry.
In an open letter to SEC Chair Gary Gensler, Congressman Torres expressed his disappointment with the SEC’s “regulation by enforcement” approach, which he believes had a terrible day in court.
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
Recall that Judge Analisa Torres’ landmark ruling stated that XRP is not an investment contract, the specific type of security that the SEC alleged Ripple had sold. She emphasized that XRP is not a security but acknowledged that it could be sold as part of an investment contract.
This clarification represents a rigorous application of the Howey test, a well-established test in the U.S. that determines if a transaction qualifies as an investment contract.
However, Congressman Ritchie Torres referred to this ruling as “The Torres Doctrine,“ highlighting that crypto assets are not securities in their essence.
Ritchie Torres Slams SEC Regulation Under Gary Gensler
He criticized the SEC for indiscriminately labeling all cryptocurrencies, except Bitcoin (BTC), as securities, stating that the SEC’s application of the Howey test has been sloppy. The politician maintained that Judge Torres’ ruling rejects the agency’s regulatory overreach.
Moreover, Ritchie Torres criticized the SEC’s regulation tactics under Chair Gensler’s leadership. He pointed out that the SEC has failed to issue any clear rules or guidance for the crypto industry, opting for mixed messages and enforcement actions instead.
The congressional representative also highlighted Chair Gensler’s inconsistent response to the question of whether Ethereum is a security, which showcased the lack of clarity from the SEC.
However, Rep. Torres urged Chair Gensler to consider Judge Torres’ ruling and shift the SEC’s focus to regulating legitimate securities offerings instead of stifling the crypto industry. He added,
“I hope that the SEC will find itself so hastened by the court’s decision that it will concentrate the Commission’s enforcement energies where it belongs: on the bona fide bad actors who perpetrate serious transgressions like fraud, market manipulation, and the misappropriation of customer funds.”
Judge Torres’s decision has been largely lauded by the global crypto community. While the SEC expressed disappointment with the ruling, it acknowledged and respected the court’s decision, claiming to continue enforcing federal securities laws vigorously.