As the lawsuit with the U.S. Securities and Exchange Commission (SEC) continues, Ripple CEO Brad Garlinghouse insists that the Commission has provided no clarity in crypto regulation. He said the SEC was using its meetings with crypto companies as a lead generation for enforcement action, and the agency had lost sight of its mission to protect investors.
Ripple CEO Says SEC Uses Meetings With Crypto Firms As Lead Generation For Execution Stocks
Amid the SEC’s lawsuit over XRP, Ripple CEO Brad Garlinghouse reiterated his concerns over the lack of clarity in crypto regulation provided by the securities watchdog. He tweeted Saturday:
American innovation is at stake due to the SEC’s refusal to provide a clear framework for crypto. Instead of working with the industry, the SEC is using their meetings with companies as lead generation for their enforcement actions.
The Ripple CEO’s tweets followed his interview with Fox Business Friday, where he also touched on the lack of clarity in crypto regulations in addition to discussing the XRP lawsuit and its implication.
“I think there has been and continues to be a lack of clarity,” Garlinghouse reiterated, emphasizing, “If we want this industry to thrive here in the United States, there needs to be clarity.” He insisted the SEC chairman couldn’t keep saying “hey, there’s clarity,” but then called on “Congress to write new laws to make it clear.” Garlinghouse pointed out that “these two things cannot exist.”
He also referenced the Nasdaq-listed crypto exchange Coinbase which recently abandoned its plan to launch a lending product after the SEC threatened a lawsuit. The exchange said the Commission had not provided any explanation for its decision.
Discussing the XRP lawsuit, Garlinghouse said that the SEC’s “mission is to protect investors and help ensure orderly markets.” However, he argued that in the XRP case:
More than 10,000 people holding XRP have filed a class action lawsuit against the SEC. These are the exact people the SEC is supposed to be protecting.
He added that without providing clarity, the securities regulator “has allowed XRP to be listed and traded very freely across the United States.” Consequently, “more and more people got involved” and XRP “traded for eight years, and then [the SEC] brought a suit driving the price down 60% or 70%.”
Garlinghouse said, “If the goal is to have orderly markets and the goal is to protect investors, I think we’ve lost sight of the big picture of what the SEC’s primary mandate is. .
The Ripple executive was asked what Gary Gensler’s end game is with Ripple, XRP, and the entire crypto business. He replied:
I think we lose sight of the fact that crypto is regulated. It’s regulated by the CFTC, it’s regulated by other government agencies, whether it’s FinCEN, U.S. treasury. So when I heard the SEC folks come up and say, “Hey, this is the Wild Wild West, it’s unregulated,” that’s not quite true.
Garlinghouse is not the only one concerned about the lack of clarity in crypto regulation. U.S. Senator Pat Toomey wrote a letter to Gensler Friday asking for clear guidance on crypto regulation. SEC Commissioner Hester Peirce also raised concerns about the lack of clarity regarding the regulation of crypto.
Garlinghouse further noted that the SEC often said, “Hey, come talk to us.” However, “every time someone goes to talk to them from the crypto community, it feels like it’s lead generation to bring enforcement actions. It’s not a good way for us to help this industry thrive in the United States, ”he said.
The SEC claimed that XRP is a security, unlike bitcoin or ether, and must be registered and regulated as such. Garlinghouse described, “If you start to treat XRP as security, it means you are subject to a lot of regulations. [and] costs associated with security settlement. The magic of XRP is how incredibly fast and how incredibly cost-efficient it is for cross-border payments, how Ripple deploys the technology.” The CEO warned:
f you start to treat it as a security the costs and the speed change dramatically and this is really an example where the SEC is actually picking the winners and losers of this new industry.
Ripple’s legal team recently said that it had no plans to settle with the SEC and is confident that SEC Chairman Gensler will be convinced that “pursuing the case is picking winners and losers in the crypto business to the detriment of innovation.”
