The SEC claimed that owing to the centralized nature of XRP, it automatically becomes a security thus, it is under its scope.
Hester Peirce, popularly referred to as “Crypto Mom”, believes that the ongoing lawsuit related to XRP against a blockchain firm Ripple Labs will no doubt add to the clarity of the regulations provided by the Securities and Exchange Commission (SEC). In an interview with Bloomberg TV, Ms. Peirce clarified the intentions of the regulator when it filed a lawsuit against a firm that offered securities to the public without registering. She said that when they think of crypto assets as securities, then they should be sold through investment contracts, which doesn’t necessarily imply that the assets are securities. However, that’s not what the lawsuit implied.
Details of the XRP Lawsuit with SEC
An extract of the complaint goes as follows: “The SEC announced that it has opened a joint lawsuit against Ripple Labs and two of the company’s executives, major security holders, who participated in the raising of over $1.3 B via a nonregistered and ongoing securities offer”.
The regulator claimed that owing to the centralized nature of XRP, it automatically becomes a security thus, it is under its scope. On the other hand, Ripple insists that no ICO was ever held, plus it can never be considered as a security as it has a global utility that’s proved daily when used as a cross-border payment.
Cryptocurrency Market Regulations
The House of Representatives adopted a bill, introduced by Patrick McHenry, that sought to form a digital assets committee that would provide clarity on the regulations surrounding the digital assets market. The EBIA- Eliminate Barriers to Innovation Act, requires both the SEC and the CFTC (Commodities Futures Trading Commission) to collaborate and work towards providing clarity of the digital assets. A report on the same is to be submitted later in the year.
Last week, a working Group for Digital Assets was launched by the Financial Services Committee, Maxine Waters noted. Ms. Maxine added that the committee will evaluate how CBDCs, cryptocurrencies, and digital assets have become a part of our daily lives (payments, remittances, and even investments, and how they have been shaping our daily financial activities.
Ms. Maxine (committee’s chairlady) further added that the committee considers viable legislations that can promote innovations tailored to protect users and investor interests while providing total financial inclusion.
Since the “Working Group” is only composed of Democrats, its performance may be limited. However, the US congress appears to be moving forward and initiating the assignment. Jeremy Morgan, an XRP pundit and practicing attorney noted that the anxiety-filled fact-finding deadline extended by 60 more days to finish the job, which changed the expected outcome of the lawsuit.
With the fact-finding deadline extension, all the parties involved are back to the drawing board with each of them seeking to outdo the other. Only time will finally shape the trajectory of the lawsuit.