The Ripple SEC Battle Could Forever Change the Regulatory Landscape
All eyes are on regulators in the US at the moment as their war on crypto intensifies. The outcome of the Ripple case with the Securities and Exchange Commission could have a major impact on the future of the agency’s enforcement regime.
The SEC has been on the warpath this year, with crypto companies as its primary targets. Furthermore, the regulator has exceeded its jurisdiction by classifying staking and stablecoins as securities.
The ongoing litigation with Ripple, which it also accused of selling unregistered securities, could have a major impact on the US regulatory landscape.
According to a February 15 San Francisco Examiner article, the legal settlement has become a “nerve-wracking waiting game for much of the crypto industry.”
Ripple vs. SEC: A Watershed Moment For Crypto
The SEC sued Ripple in December 2020. It accused the fintech firm of failing to register about $1.4 billion of its XRP cryptocurrency as securities. Ripple claims that the cross-border payment coin is not a security, arguing that it does not satisfy the requirements of the Howey test.
If the company wins the case, which CEO Brad Garlinghouse expects to conclude by summer, it could change the way the SEC regulates enforcement. Analyst Rebecca Wettemann told the outlet:
“The Ripple result will set the direction and tone for how the US regulates crypto going forward,”
Fintech analyst with Moor Insights & Strategy, Melody Brue, echoed a common complaint that there is no clarity or guidance from the SEC:
“Gensler makes rules when dealing with crypto. [That’s why] one of the more significant things that will come out of the (Ripple) decision will be precedent,”
Furthermore, Ripple’s General Counsel, Stuart Alderoty, called The SEC chairman “a political liability” earlier this week. Many crypto industry executives and experts have echoed similar sentiments.
However, a loss for Ripple could send shock waves across the US crypto industry. A victorious SEC would likely attack all other digital assets in the same way. This will drive investment and innovation abroad and put investors at risk, which is exactly what regulators are trying to prevent.
Last year, Brad Garlinghouse said he would leave the US if Ripple loses the case.
The SEC war on crypto continues
Gary Gensler’s agency has not relented in its pursuit of crypto companies. On February 15, CNBC reported that the SEC had proposed rules that would change which crypto firms can be custodians of clients’ assets.
The proposed changes to federal law would mandate custodians, including crypto exchanges, “secure or maintain certain federal or state records.”
Additionally, this makes it even more difficult to secure regulatory approval for crypto products, further stalling the industry.
Disclaimer
BeInCrypto has reached out to the company or person involved in the story for an official statement on the latest development, but has yet to hear back.
