- Ripple CEO Brad Garlinghouse criticizes the SEC for losing focus on protecting investors and hindering crypto innovation.
- Garlinghouse advocates for the U.S. to adopt federal laws governing digital currencies, moving away from regulation through litigation.
Brad Garlinghouse, the CEO of Ripple Labs, has raised concerns about the U.S. Securities and Exchange Commission’s (SEC) approach to cryptocurrency regulation, suggesting a disconnect from its mission to protect investors.
Questioning SEC’s Regulatory Approach
Speaking at the Ripple Swell event in Dubai, Garlinghouse questioned the SEC’s focus and its impact on the crypto industry.
“Who are they protecting in this journey?”
he asked, pointing out that the regulatory body’s enforcement-centric approach has stifled industry growth. This criticism follows a lengthy legal battle between Ripple and the SEC, where the regulator accused Ripple of conducting a $1.3 billion securities fraud by selling XRP to retail investors.
However, Ripple scored a significant legal victory in July when a judge ruled that XRP is not a security. The ruling was a major development in the ongoing case and indicated a shift in the legal landscape for digital currencies.
The Need for Federal Crypto Laws
Garlinghouse emphasized the importance of moving beyond a regulation framework dominated by litigation. He advocates for the introduction of federal laws governing digital currencies, which he believes could provide much-needed clarity and stability for the industry. This shift could facilitate the thriving of the crypto sector in the U.S., a market with immense potential.
He referenced a recent victory for digital asset manager Grayscale regarding a Bitcoin ETF application, where a federal judge criticized the SEC for being
“arbitrary and capricious.”
These words from a typically reserved judge highlight the need for the SEC to reassess its regulatory strategy.
Ripple’s Ongoing Legal Battle
As the legal battle between Ripple and the SEC continues, the next key step is the remedies discovery process. The SEC has 90 days from November 9 to conduct related discovery, which will determine the appropriate penalties Ripple may face for its alleged securities law violations.
Ripple’s Role in Cross-Border Payments
Ripple, known for its blockchain-based cross-border payment solutions, leverages XRP as a “bridge” currency to facilitate transactions between different fiat currencies. This approach has positioned Ripple as a key player in the global financial transaction space.
Garlinghouse’s critique of the SEC’s current regulatory approach underscores the broader call for a more nuanced and constructive regulatory framework for digital assets. As the industry awaits the outcomes of ongoing legal proceedings, these developments could have far-reaching implications for the future of cryptocurrency regulation and innovation.