Ripple CEO Brad Garlinghouse has publicly slammed the US Securities and Exchange Commission (SEC) Chairman Gary Gensler for claiming that he has the authority to determine which crypto tokens are securities, rather than relying on the legislation that governs his agency’s power. Garlinghouse has expressed his frustration with Gensler’s ambiguous stance on what constitutes a security, claiming that without clear jurisdiction, ambiguity only leads to confusion and misunderstandings. In essence, Gensler’s lack of clarity is causing a delay in decision-making processes by the SEC, leading to challenges for crypto companies seeking to ensure compliance.
Since the SEC filed a lawsuit against Ripple, Garlinghouse, and co-founder Chris Larsen in late 2020, the company has been embroiled in a legal dispute with the securities regulator. The lawsuit alleges that XRP, Ripple’s digital currency, is a security, but Ripple and Garlinghouse have consistently argued that it is not. The SEC’s position on XRP has caused ripple effects throughout the crypto industry, leading to widespread uncertainty and confusion around which tokens constitute securities and which do not.
Garlinghouse has been vocal about his frustration with the SEC’s lack of clear regulatory guidelines, making it difficult for companies in the crypto space to ensure compliance with securities laws. Ripple has been working tirelessly to prove that XRP is not a security, even launching a website called “On The Record” to set the record straight on alleged SEC misrepresentations. Ripple has also claimed that the SEC is holding meetings with crypto companies primarily for the purpose of generating leads for its Enforcement Division.
Garlinghouse’s latest criticism of Gensler comes in response to Gensler’s recent claim that the current securities laws “cover most of the activity that’s happening in the crypto markets.” Garlinghouse tweeted on Thursday, “For the Chair of the SEC to assert that he dictates what is a security – and not the legislation from which his agency derives its power – is beyond comprehension. It’s time for elected officials in the U.S. to take notice.”
Garlinghouse’s comments highlight a growing tension between the crypto community and the SEC, which has expressed concerns over the rise of crypto-powered frauds and scams. Gensler has previously stressed the importance of regulating the crypto industry to protect American investors, emphasizing that all crypto tokens, except for bitcoin, are considered securities. His views have caused further confusion within the crypto community, prompting Garlinghouse to call for clarity from the SEC.
Recently, the Nasdaq-listed crypto exchange Coinbase received a Wells notice from the SEC regarding potential violations of the securities law. The company noted in its response: “The SEC will not let crypto companies ‘come in and register’ – we tried.” This statement highlights the challenges that crypto companies face in trying to comply with securities laws, which the SEC has been accused of making more cumbersome by not providing clear guidelines.
In conclusion, Ripple CEO Brad Garlinghouse’s latest criticism of SEC Chairman Gary Gensler is reflective of a larger issue within the crypto industry – the lack of clear regulatory guidelines around what constitutes a security. The ongoing legal dispute between Ripple and the SEC over whether XRP is a security has highlighted the need for clear and concrete regulations around cryptocurrencies. However, the SEC’s ambiguous stance on this matter has only added to the confusion and left companies in the crypto space struggling to ensure compliance. Garlinghouse’s call for clarity from the SEC is necessary if the crypto industry is to thrive and make a positive impact on the financial landscape.
