Hostility and a lack of transparency by the SEC, alongside a failure to pass regulatory guardrails, has "generated a debilitating amount of legal uncertainty," the Pennsylvania Republican wrote on Twitter on Friday.
"These failures have driven crypto development to foreign jurisdictions that have little or insufficient regulation," he added, referencing the collapse of Bahamas-based failed crypto exchange FTX.
Toomey posited that had there been a "sensible, legislatively authorized, American regulatory framework for digital assets," the impact of the bankruptcy on Americans may have been mitigated.
The comments come after a torrid week in the crypto industry and shocking revelations about one of the world's largest crypto exchanges. A liquidity crisis brought on by revelations about its balance sheet pushed FTX toward insolvency. Binance, which signed a letter of intent that could have led to an acquisition, ultimately passed on the deal, citing due diligence concerns as well as reports of investigations by American regulators.
FTX and sister firm Alameda filed for Chapter 11 bankruptcy protection on Friday, citing balance sheet black holes of as much as $8 billion.
Ironically, disgraced FTX CEO Sam Bankman-Fried had been working with the U.S. Senate to create crypto regulations. Bipartisan authors put forward legislation that would increase oversight of cryptocurrencies considered to be digital commodities in the U.S. They still plan to move forward with the bill, The Block reported earlier this week.