SEC Lawsuit Vs. Ripple: Regs Needed To Protect Investors in Crypto
• The recent ruling in the US Securities and Exchange Commission’s (SEC) lawsuit against Ripple exposed the inadequacies of the current regulatory framework.
• Republican lawmakers Dusty Johnson and French Hill have introduced the Financial Innovation and Technology for the 21st century Act to provide a much-needed regulatory framework to protect investors and bolster America’s position in the crypto industry.
• However, some Democratic representatives are criticizing this bill, arguing that it is taking away resources from other issues that should be prioritized by the House Agriculture Committee.
SEC Lawsuit Against Ripple Exposes Regulatory Framework Inadequacies
The recent ruling in the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Ripple indicates Congressional legislation is necessary for the crypto space, according to two American lawmakers. In a new op-ed in The Hill, US Representatives Dusty Johnson (R-S.D.) and French Hill (R-Ark.) say Judge Analisa Torres’ decision about XRP “exposes the inadequacies in the current regulatory framework.” Torres ruled that Ripple’s automated, open-market sales of XRP did not constitute security offerings, contrary to what the SEC alleged. Although she favored the SEC’s claim that Ripple’s sale of XRP directly to institutional buyers constituted a securities offering.
SEC Chair Gary Gensler’s Position on Digital Assets
In their op-ed, Johnson and Hill criticized SEC Chair Gary Gensler’s previous assertions that every token besides Bitcoin (BTC) is a security: “Judge Torres’ holdings directly counter Mr. Gensler’s position that ‘most’ digital assets are inherently securities and lend credence to a growing bipartisan view that the Howey test for determining securities is unclear.” If other courts adopt Judge Torres’ reasoning about digital assets not being considered securities offerings, then consumers won’t be protected without a change in regulation which can only be done through legislation from Congress.
Financial Innovation And Technology For The 21st Century Act
Republican lawmaker House Committee on Agriculture Chair Glenn Thompson (R-PA), who introduced this legislation along with Hill and Johnson, says it seeks to provide investors with protection while bolstering America’s place within this nascent industry: “Legislation from Congress is the only solution…[which] will provide digital asset participants with long overdue clarity while protecting consumers from harm.”
Democratic Criticism Of Bill
However some Democratic representatives argue that this bill takes away resources from issues which should instead be prioritized by House Agriculture Committee: “It represents ‘a handout to crypto exchanges, Wall Street…and special interests.'”
Conclusion
Ultimately, whether or not this proposed law will pass remains uncertain as both sides debate on its legitimacy; however it does bring up an important issue regarding how cryptocurrency markets should be regulated properly given their decentralized nature – something which requires congressional action if we want any real progress.
