According to Brad Garlinghouse, Ripple's CEO, the SEC has seemingly abandoned their purpose of safeguarding investors. This was relayed to CNBC's Dan Murphy at Ripple Swell in Dubai. July brought a major victory for Ripple, with a judge concluding XRP is not a form of security. The upcoming remedies discovery is sure to be another important piece of the puzzle. Garlinghouse anticipates the US will move away from relying on litigation as a means to control cryptocurrency regulations, and instead look to Congress to issue federal regulations regarding digital currency.
The CEO of blockchain company Ripple, Brad Garlinghouse, expressed his dissatisfaction with the U.S. Securities and Exchange Commission during the company's Ripple Swell conference in Dubai. When contacted by CNBC, the SEC was not available for comment. Garlinghouse noted that as a regulator, the SEC should be focused on protecting investors, asking "Who are they protecting in this journey?" The accusations of $1.3 billion securities fraud via sales of XRP to retail investors were later dropped against Ripple's executive, Chris Larsen, and Garlinghouse in October. The remedies discovery process is currently underway and Garlinghouse identified this as an "important step for the industry as a whole". He further expressed his hope that this could lead to the "thawing of the permafrost in the United States" regarding blockchain technology.
Garlinghouse believes the U.S. should depart from the current modus operandi of employing a steady stream of legal battles in order to determine crypto regulation, and should instead rely on Congress to implement federal regulations concerning digital currencies. "The SEC keeps doing the same thing, although they anticipate a different result", he said. He then cited the victory of Grayscale, in which a federal judge had to admonish the SEC for its arbitrary and capricious denial of the firm's request to start a bitcoin ETF, noting that such language is rarely used by judges. "The SEC has to come to terms with the fact that their approach of regulation through litigation does not lead anywhere", Garlinghouse concluded.
Ripple is a payments company that offers a specialized service in cross-border money transfers. Its RippleNet network is utilized by banks and other financial institutions to enable the transfer of funds from one country to another. To facilitate this transfer of money, the company uses a cryptocurrency known as XRP. This XRP "token" can function as a "bridge" between one fiat currency and another. For example, Ripple's technology allows you to send money from the U.S. to Mexico by first converting the U.S. dollars into XRP and then exchanging the XRP for Mexican pesos at the destination. This removes the need for cash to be pre-loaded onto accounts in other countries before the transfer can take place.XRP is a token that is heavily speculated upon by investors. The price of XRP underwent a major decline during the 2018 "crypto bear market". This was met with alarm by regulators who were concerned about the potential negative impact that digital currencies could have on retail investors.Unlike other forms of cryptocurrency, XRP is largely owned by Ripple itself, which holds a hefty quantity of the token in an escrow account. It releases XRP tokens to investors (both institutional and retail) through sales on cryptocurrency exchanges. This activity generates revenue for Ripple.The Securities and Exchange Commission (SEC) has filed a case against Ripple on the basis that it believes XRP is a security, not a currency or commodity. This designation would require Ripple to meet certain regulations and filing requirements, a process which could prove to be costly. Ripple, however, insists that XRP should not be classified as a security.
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