Ripple CEO Replies To Former SEC Chairman On Crypto Regulation, They See Eye To Eye?
Ripple and the U.S. Securities and Exchange Commission (SEC) have an ongoing legal battle. The regulator filed an action against the payment company at the end of 2020. Many believe that this was former SEC Chairman, Jay Clayton, decision before leaving office.
During his administration, Clayton’s SEC denied several Bitcoin ETF proposals and was known for his anti-crypto stance. After his departure, the former SEC Chair went into the private sector to work for One River Digital Asset Management as part of its Academic and Regulatory Advisory Council. Clayton will advise the firm on Bitcoin and other cryptocurrencies.
In an editorial article for the Wall Street Journal titled “Crypto Needs Regulation, but It Doesn’t Need New Rules”, Clayton makes the case for more regulation to the crypto industry under the current framework. He goes on to called cryptocurrencies part of a “digital revolution underway in the financial services industry”.
Clayton argues that the U.S. regulators have “decades” of experience with financial activities perform by cryptocurrencies, such as payments. Therefore, he adds that the regulators already have the tools to address the potential risks of this new asset class without “stifling their promise”. Clayton claims:
(…) If coordinated analysis by national and international authorities reveals a regulatory gap, it should be filled. But we shouldn’t begin by assuming a need to reinvent the regulatory regime.
As an example, the former SEC Chair cited the “bearer bonds”, an instrument used by holders to demand cash payments upon its presentation. Clayton claimed that a coordinated effort between several U.S. and international agencies “brought this market to a close” without affecting the overall bond market. He added:
The same approach can be applied to new instruments that present similar risks, such as transferring bitcoin using an anonymous wallet.
Ripple Weighs In On Clayton’s Proposal
Via his Twitter handle, Brad Garlinghouse, Ripple’s CEO, replied to Clayton. He referred to the article as “definitely ironic” but celebrated the change in the former government official’s view on the crypto industry.
My main takeaway from this? Jay Clayton is joining the chorus of voices saying there is & has been a lack of regulatory clarity for crypto and that stifles innovation here in the US (definitely ironic, but better late than never!)
The executive emphasized that technology can be useful for many purposes, legal and illegal. However, he believes compliant companies in the U.S. have been left in “limbo” or are facing legal actions. Thus, he called for a clear legal and regulatory framework and quoted Clayton, the former SEC Chair said in his article:
“We must also keep in mind the default rule in the American system: Innovation is welcome absent some legal reason to oppose it.” Words to live by!
In addition to Ripple Labs, Garlinghouse and Chris Larsen were charged by the SEC with the alleged sales of an unregistered security, XRP. The trial is currently in a critical phase, as the District Court for the Southern District of New York evaluates the evidence presented by both parties.
Recent developments seem to favor Ripple over the regulator, but the legal process is still early to rule out any potential outcome.
At the time of writing, XRP trades at $0,92 with some losses in the 1-hour and daily chart. In the weekly chart, XRP has a 2.7% profit and a 41.3% loss in the monthly chart.Source