Ripple Calls for Clearer Crypto Regulations After SEC Request

Ripple, a leading blockchain payments company, has reached out to the U.S. Securities and Exchange Commission (SEC) to advocate for clearer regulatory guidelines for the cryptocurrency industry. This initiative follows a request from Hester Peirce, the head of the SEC’s Crypto Task Force, who sought public input on establishing a clearer crypto taxonomy. Peirce's request, titled “There must be some way out of here,” aims to address the regulatory confusion that has persisted under previous SEC leadership.

In its response, Ripple criticized the past SEC leadership, particularly under Gary Gensler, for issuing overly confusing and lengthy guidance that lacked legal backing. The company asserted that the SEC's previous approach created unnecessary confusion for market participants, effectively masking the agency's failure to adhere to the law. Ripple proposed three solutions to help the SEC resolve this confusion and provide much-needed regulatory clarity.

Firstly, Ripple recommended that the SEC should return to its foundational principles by regulating only what constitutes securities as defined by federal securities laws. The company suggested that many digital assets, particularly those that do not generate yield or confer rights to profits, should not be classified as securities. This approach would help distinguish between assets that fall under securities regulations and those that do not, thereby reducing regulatory ambiguity.

Secondly, Ripple urged the SEC to stay within its statutory bounds and avoid creating new laws that could further complicate the regulatory landscape. The company emphasized that the power to create new laws lies with the U.S. Congress, and the SEC should focus on enforcing existing regulations rather than establishing new ones. This would ensure that the regulatory framework remains consistent and predictable for market participants.

Lastly, Ripple called for greater regulatory clarity in the crypto market. The company praised the SEC Corporation Finance Division for clarifying that meme coins are not securities, which suggests that meme-based cryptocurrencies are not subject to U.S. federal securities laws. Ripple recommended that the SEC adopt a similar concise approach to end the regulatory confusion in the crypto market. This would provide a clear framework for market participants to operate within, fostering innovation and growth in the industry.

Ripple's proposals come at a time when several crypto entities, including Ripple itself, have been affected by regulatory uncertainty. The company has been involved in a protracted legal battle with the SEC, which is nearing its conclusion following the SEC's decision to drop its appeal against Ripple. While one major issue remains—Ripple’s own cross-appeal—many legal experts anticipate that the company will drop the case once it reaches a favorable agreement with the SEC. This resolution would mark a significant step towards regulatory clarity and stability in the crypto market, benefiting both Ripple and other market participants.