Ritchie Torres, the New York Democrat, directed criticism towards the US Securities and Exchange Commission (SEC) for its failure to provide any clear guidance where the crypto industry is concerned.
This was after the securities regulator suffered defeat in its legal battle against Ripple Labs on several fronts.
The criticism
On Tuesday, Torres penned an open letter to Gary Gensler, the chairman of the SEC, and said that the enforcement approach for regulation had had a bad day in court.
His statement was in accordance with long-time criticism of the approach that the SEC has taken to regulating the crypto industry.
This criticism has come from not only members of the crypto industry but also from members of Congress.
A summary judgment ruling had been issued in the previous week by the judge overseeing the lawsuit between the SEC and Ripple Labs.
As per the ruling, the XRP token does not classify as a cryptocurrency and its sales on secondary markets, such as crypto exchanges, are not categorized as such either.
The Ripple ruling
According to Torres, the reasoning that Judge Annalisa Torres had put forward showed that the Howey Test had been rigorously applied.
This is the standard usually applied for identification of a security and as per Torres, the SEC has done a sloppy job of doing so.
The congressman said that the ruling from the judge made it clear that digital assets cannot be considered securities.
In addition, it also clarifies that the SEC does not have the legal authority required for regulating digital assets that do not fall under the category of a security offering.
Gensler had stated on Monday that they were ‘disappointed’ with the ruling and were looking at their options.
But, Torres was quick to add that the chances of the SEC being able to appeal the ruling immediately were very low, as there are some issues in the case that require fact-finding and this can be time consuming.
The precedent
The congressman used the term ‘Torres Doctrine’ to refer to the president that the judge has now established and added that it would now reign supreme.
Torres said that the legal foundation that the SEC had used to file a lawsuit against Coinbase had been tenuous already and it has now come crashing down.
The said lawsuit against the crypto exchange was filed in June and SEC had named a number of other crypto tokens as securities in it.
Solana (SOL), Cardano (ADA), and Polygon (MATIC) are some of the tokens mentioned. The congressman concluded that he wanted to see how the SEC would now reevaluate its regulatory approach after the ruling.
The criticism from Torres comes after Comptroller General Gene Dodaro and Inspector General Deborah Jeffrey also expressed the same on Thursday.
In fact, an investigation was demanded into the approval of ‘Prometheum’, the crypto broker-dealer, by the SEC.
The politician asserted that this approval was just propaganda, as they just wanted to create the illusion of providing regulatory clarity.