XRP News Today: Ripple Warns Senate Bill Could Trap XRP in Extended SEC Oversight

Ripple’s Chief Legal Officer, Stuart Alderoty, has issued a formal warning to U.S. lawmakers regarding a proposed Senate bill on digital assets, arguing that it could result in prolonged regulatory uncertainty for XRP and other well-established cryptocurrencies. Alderoty submitted a detailed response to the U.S. Senate Committee on Banking, Housing, and Urban Affairs, outlining concerns that the bill would expand the Securities and Exchange Commission’s (SEC) jurisdiction in a manner that fails to align with the current market realities [1].

A key point of contention is the bill’s definition of “ancillary assets,” which Alderoty claims could extend the SEC’s oversight to digital assets that have since evolved into widely used, functional tokens. He emphasized that this could trap XRP—alongside others like Ethereum and Solana—under indefinite federal supervision, despite their roles in open and permissionless blockchain networks [1].

Alderoty also criticized the bill’s continued reliance on the Howey test, a framework used to determine if an asset qualifies as a security, without imposing clear statutory boundaries. He noted that this lack of limitation gives regulators too much subjective discretion and could lead to inconsistent enforcement across the industry [1].

To address these issues, Alderoty proposed several reforms, including grandfathering provisions for long-traded tokens, clearer limits on redefining related-party transactions, and specific protections for protocol-level activities such as staking and consensus mechanisms. He also advocated for federal preemption in key regulatory areas to avoid a patchwork of conflicting state laws, while allowing states to retain oversight on fraud and consumer protection [1].

Ripple has consistently argued that XRP should be classified as a utility token rather than a security, and the current regulatory environment has hindered the company’s ability to offer its cross-border payment solutions without legal ambiguity. The warning reflects broader concerns in the industry about the potential for overly broad regulatory language to stifle innovation and create an uneven playing field [1].

As the Senate bill remains in the early stages of development, Ripple and other industry participants are pushing for a balanced and inclusive regulatory framework that accounts for the diverse nature of digital assets. Alderoty stressed that without meaningful revisions, the proposed legislation could fail to deliver the clarity it aims to provide and instead prolong uncertainty for market participants [1].

Source:

[1] Ripple CLO Warns: This Crypto Bill Could Trap XRP In Endless Regulatory Watch (https://timestabloid.com/ripple-clo-warns-this-crypto-bill-could-trap-xrp-in-endless-regulatory-watch/)