Following the announcement of an enforcement action by the Securities and Exchange Commission (SEC) alleging Ripple engaged in the sale of unregistered securities pertaining to XRP, Ripple has countered and executives have publicly countered the claims.
Meanwhile, the lawsuit has caused several digital asset exchanges to halt trading in XRP – at least temporarily.
The SEC complaint is an interesting read in its allegations leveled against Ripple, meanwhile, XRP has tanked by around 30% as investors have bailed on one of the world’s most popular cryptos.
At least one industry expert is coming to the defense of Ripple pointing to the lack of clarity regarding the regulation of digital assets – an opinion that many other industry insiders share.
Cato, a public policy research organization that supports free-markets shared the following statement. Cato’s Director of Financial Regulation Studies Jennifer Schulp stated:
“The SEC’s suit against Ripple highlights the importance of having clear rules that apply in the crypto space. This type of regulating by enforcement action – where never-clear rules defining a security are especially hard to apply and where the industry has been begging for guidance for years – is regulatory behavior that has the potential to stifle innovation and send the industry scrambling for other markets.”
Ripple concurs with the detrimental impact of the SEC’s actions pertaining to Fintech innovation. A Wells Response posted by Ripple stated:
“Innovation in the cryptocurrency industry will be fully ceded to China. The Bitcoin and Ethereum blockchains are highly susceptible to Chinese control because both are subject to simple majority rule, whereas the XRPL prevents comparable centralization. An expansive application of Howey will have a chilling effect on the entire blockchain industry. This would make it impossible for any company to develop and promote a digital asset without running afoul of the securities laws, even where the company has never sold the asset as an investment, like Ripple. No foreign regulator has determined that XRP is a security. In fact just the opposite is true. The U.S. would be the unfortunate outlier.”