U.S. Senator Pat Toomey (R-Pa.) sent a letter accusing the securities agency of failing to give regulatory clarity that could have prevented some of the recent industry damage.

Sen. Pat Toomey accused the Securities and Exchange Commission (SEC) of dragging its feet on instituting oversight of crypto firms as some of those companies collapsed, taking investors’ cash with them.

“Had the SEC responded to calls for clarity on how it would apply existing securities laws to novel digital assets and services, things could have been different,” Toomey, who is the ranking Republican on the Senate Banking Committee that oversees the regulator, wrote in a letter to SEC Chair Gary Gensler. “Companies could have adjusted product offerings accordingly, preventing investor losses today, and the SEC would have been free to focus enforcement efforts on the worst actors.”

Toomey referenced firms that “often promised enormous, seemingly unsustainable interest rates to depositors, and at least one business allegedly engaged in risky practices,” and he further singled out Celsius’ lending that left billions of dollars of customer funds in limbo. Despite requests from the senator and other lawmakers – and crypto firms themselves – the SEC has declined to offer sufficient clarity about what digital assets meet the definition of securities, Toomey said in the Tuesday letter.

Gensler has routinely said the definitions already provided by legal precedent make it clear that most digital tokens are securities, and the exchanges where they’re traded should register with his agency.

Toomey, who has been taking up the crypto cause repeatedly during his final months in office, asked several enforcement-related questions of the agency and requested details about its findings on managing the so-called Howey test that defines securities. The letter calls for a response by Aug. 9.

In May, the senator made a different argument that crypto firms should be allowed to collapse and that firms melting down is a natural part of the financial system.

“It’ll probably take some failures in this space in order for the market to figure out what works,” he’d said as algorithmic stablecoin terraUSD (UST) floundered.

Toomey has also previously cautioned against aggressive investor-protection moves by the SEC. Last year, in defense of digital trading technologies, the lawmaker urged the agency “to proceed cautiously and avoid the temptation to pursue paternalistic regulations that restrict investor freedom under the guise of investor protection.”

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The Say No to the Silk Road Act stems from not only the well-known privacy concerns around the Chinese CBDC, but also from worries it could be a tool to evade sanctions.

Led by Sen. Bill Cassidy (R-La.) and Sen. Marsha Blackburn (R-Tenn.), nine Republican U.S. Senators have introduced a bill aimed at setting regulations and guidelines concerning China’s digital yuan.

“If left unchecked, technologies including China’s Digital Yuan will empower Russia to evade global sanctions on systems such as SWIFT and enable the CCP to further surveil and threaten their citizens,” said Sen. Blackburn in a press release. “This bill holds China accountable as they introduce their new digital currency,” said Sen. Cassidy.

The Say No to the Silk Road Act would – among other things – require the State Department to issue a warning on the digital yuan, require the Secretary of Commerce to report on trade enforcement actions and require that any foreign government that receives financial assistance through the U.S. military disclose if they use China’s central bank digital currency (CBDC) in either a settlement or reserve currency capacity.

Seven other Republican senators – Ted Cruz (R-Texas), Cynthia Lummis (R-Wyo.), Mike Braun (R-Ind.), Rick Scott (R-Fla.), Cindy Hyde-Smith (R-Miss.) and Tommy Tuberville (R-Ala.) – have already signed on.

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