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Independent Investigation of SEC's Handling of Digital Assets Called For

Updated: Jul 20, 2023


SEC Chairman Gary Gensler
SEC Chairman Gary Gensler. Image source: GettyImages

WASHINGTON D.C. – Congressman Ritchie Torres (D-NY) has taken a stand against the U.S. Securities Exchange Commission (SEC) by requesting two separate independent investigations into the regulatory body's approach to digital assets. In a public announcement, Rep. Torres criticized the SEC's granting of a special purpose broker-dealer (SPBD) license to Prometheum, a non-trading digital assets platform, under questionable circumstances.


Unusual Circumstances Surround Prometheum's Licensing


Torres also expressed concerns about the SEC's failure to establish an effective registration process for real-world digital assets platforms. Prometheum, a trading platform that does not engage in the trading of digital assets, was granted an SPBD license by the SEC.


This move has drawn significant attention due to the decision's unusual circumstances. Congressman Torres alleges that the license was issued under questionable circumstances, pointing to the potential politicization of the registration process by SEC Chair Gary Gensler.


This controversial decision has raised concerns about the SEC's regulatory practices and ability to effectively oversee the digital assets industry. Thus far, the SEC's handling of digital assets has left many companies, such as Ripple, in legal quagmires, unable to reclassify their assets to become compliant.


Inadequate Registration Process for Digital Assets Platforms


Another aspect of Congressman Torres' request for investigations pertains to the SEC's failure to establish a robust and efficient registration process for real-world digital assets platforms. Torres argues that the current path to registration is ineffective and leaves platforms uncertain about compliance requirements. He criticizes the SEC for regulating by enforcement rather than providing clear guidelines, stating that this approach is detrimental to the industry's growth and stifles innovation.


SEC's Handling of Digital Assets


Congressman Torres emphasizes the importance of a balanced approach to regulating digital assets. He likens the SEC's actions to those of an overzealous traffic agent, arbitrarily issuing speeding tickets while leaving drivers uncertain about the speed limits.


Torres argues that regulation by enforcement is not an effective way to oversee the digital assets industry. Instead, he calls for a more transparent and predictable regulatory framework that fosters innovation while safeguarding investors.

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