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Interesting, Senator Toomey

Sen. Pat Toomey of Pennsylvania presented U.S. Securities and Exchange Chairman Gary Gensler with a list of more than two dozen questions concerning cryptocurrency regulation in a letter Friday, requesting that the regulator provide greater clarity on its approach to digital assets.

“For investors to benefit from a fair and competitive marketplace, regulators must proactively provide rules of the road to the industry,” the ranking Republican on the Senate Banking Committee wrote. “Unfortunately, the Securities and Exchange Commission (SEC) has instead adopted a strategy of regulation-by-enforcement in this area.”

Toomey said that the SEC has brought enforcement actions against issuers of digital assets for failing to register with the agency as an public issuer of securities, but has failed to identify “the securities involved or the rationale for their status as securities, which would have provided much-needed public regulatory clarity.”

The Senator requested that Gensler elaborate on why he believes stablecoins, or cryptocurrencies designed to maintain their value relative to the U.S. dollar DXY, -0.20%, could possibly be considered securities under U.S. law and therefore under the authority of the SEC, as Gensler had stated in a hearing earlier this month.

Stablecoins, including Tether USDTUSD, -0.02% and USD Coin USDCUSD, have become important instruments in the crypto market, facilitating the trading between various digital assets like bitcoin BTCUSD, -2.98% and ether ETHUSD, -4.95%.

“In defining the scope of the market that Congress wished to regulate, Congress painted a broad brush,” Gensler said during the hearing. “It actually included about 35 different things inside that definition of a security.” Toomey asked Gensler to specify exactly which of these definiti...

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