Ripple CEO Brad Garlinghouse recently criticized the U.S. Securities and Exchange Commission (SEC), stating that its actions towards the crypto industry have failed in protecting investors. Speaking at the Ripple Swell conference in Dubai, Garlinghouse raised concerns about the SEC’s focus and questioned who exactly the watchdog was protecting during its regulatory journey. The CEO argued that the SEC’s enforcement approach has only hindered the industry’s growth and highlighted the need for a new tailor-made regulatory framework that takes into account the nuances of digital assets.
This criticism comes amidst a multi-year legal battle between Ripple and the SEC. The watchdog accused Ripple and its executives of conducting a $1.3 billion securities fraud by selling XRP to retail investors. However, in a significant victory for Ripple in July, a judge ruled that XRP is not a security. Garlinghouse referenced this win, as well as a recent victory for Grayscale, a digital asset manager, in relation to a Bitcoin ETF application. The federal judge presiding over the Grayscale case criticized the SEC for its “arbitrary and capricious” actions, which Garlinghouse described as “damning words.”
Garlinghouse believes that these legal developments may prompt the SEC to reevaluate its regulatory strategy. The CEO expressed hope that the regulatory stance towards the digital assets industry would become more favorable following these court decisions. He urged the government to take a proactive approach in supervising the industry, starting with the implementation of new digital asset laws. Garlinghouse emphasized the need to move away from a pattern where crypto regulation is determined through litigation and called for the introduction of federal laws governing digital currencies by Congress.
According to Garlinghouse, the introduction of federal laws would bring much-needed clarity and stability to the industry. He reiterated that XRP should not be considered a security and highlighted the role of federal laws in providing the necessary regulatory guidance. The CEO emphasized the need to break away from the current pattern of regulation through enforcement and urged for a more proactive and comprehensive approach.
The Road Ahead
As the legal battle between Ripple and the SEC continues, the next key step is the remedies discovery process. The SEC has been given 90 days from November 9th to conduct related discovery, according to a proposed schedule. This process will play a crucial role in determining the outcome of the case and could further shape the regulatory landscape for digital assets.
Ripple CEO Brad Garlinghouse’s criticism of the SEC highlights the need for a reassessment of the regulatory strategy. He believes that the enforcement approach of the SEC, primarily through lawsuits, has stifled growth and innovation within the crypto industry. Garlinghouse calls for a tailored regulatory framework that considers the unique characteristics of digital assets. He hopes that recent legal victories and the ongoing legal proceedings will pave the way for a more favorable regulatory environment, driven by proactive government involvement and the introduction of federal laws governing digital currencies.
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