Ripple prepares for hearing with co-founder expressing great optimism

  • The stage is set for another round between the SEC and Ripple over the nature of XRP- security or not.
  • Going into this, CEO Brad Garlinghouse says he is feeling good about the proceedings but the lack of regulatory clarity has certainly made it frustrating.

Ripple is set for a hearing in the next couple of hours. The case brought against it by the Securities and Exchange Commission (SEC) seeks to determine whether XRP is a security or a cryptocurrency. The SEC believes that for the last 8 years, Ripple has been offering unlicensed securities. Market observers in support of Ripple have termed the move by the SEC as regulation by enforcement.

Ripple Labs CEO holds the same opinion and has called on the US to come up with clear regulations around cryptocurrencies. He adds that a lack of regulations has stifled the industry. In its failure, the likes of Singapore, Japan, China and the UK, are quickly surpassing the US in innovation.

So far, the SEC has only exempted Bitcoin and Ethereum from being securities. The rest of the lot is still not in the clear and Ripple executives have pointed that their case could set a precedent for other digital assets.

The SEC has been accused of making up rules to attack Ripple, mainly because it has allowed XRP to trade for the last 8 years, allowing it to grow to be the third-largest digital asset before finally determining it as a security.

According to co-founder Chris Larsen, there is a complexity over regulations as there are 8 federal regulators within the government. He further stated that some of these agencies like the federal reserve have been forward-thinking about the issue. Larsen states he is optimistic that the SEC will also drop its biases against Ripple.

Ripple fighting foreign discovery

CEO Garinghouse has also stated that XRP is only classified as a security in the US. For one, Japan has categorically stated that it views XRP as a currency. The UK treasury shares the same view. So is it just the SEC?

In the latest filings, Ripple and the SEC are engaged over the legality of the SEC contact with foreign entities. The SEC argues that it was intended to rebut some of Ripple’s key defense, for example, as to whether Ripple’s actions impact XRP prices. The SEC which is trying to engage with over 20 foreign entities maintains that these entities have the freedom to reject the Memorandum of Understanding (MOU).

One of Ripple’s strongest arguments is that some of these entities are based in =Japan, UK and Singapore. Ripple believes they cannot be legally binding since regulators in these regions do not classify XRP as a security.

Garlinghouse has previously stated that 95 percent of their customers are outside the US. Hence, if the court rules that the SEC should not provide these discoveries, its case will be in jeopardy.

Former SEC heads under review

Several accusations have been going around that the case brought by the SEC was personally motivated. To be clear, the case was filed during the Trump administration when Jay Clayton was in charge. Marc Berger was the Enforcement Director and William Hinman was the Director of Corporate Finance. The individuals have been connected with companies or organizations with an interest in Bitcoin and/or Ethereum. William Hinman for instance before joining the SEC was working in the law firm Simpson Thacher – which sits on the Ethereum Enterprise Alliance. He is said to have been receiving funds while at the SEC. When he declared that Ethereum was not a security, prices soared. According to Bloomberg, he has since left the SEC and rejoined the law firm.

Among other accusations, Jay Clayton since leaving the SEC office has joined One River Asset Management, a digital asset hedge fund focused on Bitcoin and Ethereum.

About Author

John Kiguru is an astute writer with a great love for cryptocurrency and its underlining technology. All day he is exploring new digital innovations to bring his audience the latest developments.

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