Ripple CEO Brad Garlinghouse recently shared his views regarding the US Securities and Exchange Commission’s (SEC) approach to regulating crypto and blockchain firms.
Garlinghouse reportedly told CNBC during the Fintech firm’s Ripple Swell conference, held in Dubai, that he believes the SEC has actually lost sight of one of its primary duties as a regulatory authority.
Garlinghouse said that in his opinion, the SEC has lost sight of their mission “to protect investors.”
According to the Ripple company CEO, the question now is, who are they “protecting in this journey?”
In 2020, the SEC had alleged that Ripple and its executives had carried out a $1.3B securities fraud through the sales of digital token XRP to retail investors.
Ripple, the SEC had alleged, failed to register the offer and sale of billions worth of XRP tokens to investors, thus depriving them of necessary disclosures regarding XRP and Ripple’s business operations.
In July of this year, Ripple achieved a major victory (according to most industry participants) as a judge ruled that XRP is not in and of itself a security.
After this landmark ruling, the SEC had been denied a request for an interlocutory appeal. And in October 2023, the SEC had proceeded to drop its securities law violation charges versus Garlinghouse and Ripple exec Chris Larsen.
The next major step in the precedent-setting case is the remedies discovery process. The SEC reportedly has 90 days starting from November 9, 2023 to carry out remedies-focused discovery. This, according to a proposed schedule shared by the SEC.
In statements shared with CNBC, Garlingouse remarked:
“I think it is a positive step for the industry, not just for Ripple, not just for Chris and Brad, but for the whole industry, that the SEC has been put in check in the United States. And I’m hopeful this will be a thawing of the permafrost in the United States for really seeing an amazing industry that has immense potential thrive in the largest economy in the world.”
Garlinghouse is now hopeful that the United States will be able to move out of a situation where cryptocurrency regulation is handled by excessive litigation to a phase where applicable federal laws governing virtual currencies are brought forward by the US Congress.
Garlinghouse also mentioned:
“One of the things that people talk about is, one of the definitions of insanity is doing the same thing over and over again, and thinking you’ll get a different outcome, the SEC is doing the same thing over and over again. And they think, I guess, they’re gonna get a different outcome at some point.”
″Grayscale also had, I think, an important victory in the United States about the bitcoin ETF, where the judge had to get, a federal judge talking about a federal agency, the SEC, saying the SEC is being arbitrary and capricious… judges tend to be pretty down the middle and try to not be dramatic — those are damning words. So I think at some point, the SEC has to step back and realize that their approach of regulation through enforcement, let’s just bring lawsuits, that has to break.”