Ripple supports the "Regulations on Crypto Assets" proposed by the U.S. Securities and Exchange Commission (SEC), and calls on U.S. regulatory authorities to make significant changes to the country's approach to cryptocurrency regulation.
On October 20th, this blockchain company submitted a comment letter to regulatory authorities, encouraging SEC to advance this proposed regulation. Ripple believes that years of regulatory uncertainty and the practice of "enforcing laws instead of formulating policies" have driven innovation in the crypto sector overseas.
Ripple Chief Legal Officer Stuart Alderoty disclosed this progress on X. He emphasized that SEC already has the legal authority to advance these proposed rules.
"We support this proposal. SEC clearly has the authority to do so," wrote Alderoty.
He also expressed concerns about regulatory authorities' long-term practice of handling cases on an individual basis and enforcing laws on a coin-by-coin basis. Therefore, Ripple stated that the industry needs a set of clear rules to provide legal clarity.
SEC Proposed Rules
In August of this year, this U.S. regulatory agency announced a proposal to introduce two exemptions in addition to the usual securities registration rules. The first exemption applies to eligible cryptocurrency projects, allowing them to raise up to $5 million in financing over a period of four years. Meanwhile, the second exemption will allow for a maximum of $75 million in financing per year.
In addition, the proposed rules will also introduce a conditional “safe harbor” for digital assets that no longer fall under the scope of investment contracts.
The main arguments of Ripple
One of the core arguments put forward by Ripple in this 20-page letter of comment is that there is a distinction between cryptocurrencies themselves and the investment contracts on which their sales are based.
According to Alderoty, this proposed rule follows the principles established by the landmark judgment “Howey” of the United States Supreme Court.
The proposed rule suggests that a cryptocurrency is not necessarily subject to securities regulation for its entire lifetime. It depends on whether the cryptocurrency is sold within the framework of an investment contract.
It also depends on what specific commitments the issuer has made. The relevant obligations may no longer apply.
Another important issue that has been strongly criticized by Ripple is the notion of using the “decentralized” characteristic as a core factor in determining whether a cryptocurrency qualifies as a security.
