As the 118th Congress gets down to business, Ripple’s chief executive has expressed cautious optimism that there will be a breakthrough in regulatory clarity for crypto.
Bipartisan support for crypto regulation
In a Jan. 3 Twitter thread, Brad Garlinghouse, the CEO of financial technology company Ripple Labs, outlined his belief that crypto regulations will finally get streamlined in the newest session of Congress.
Garlinghouse noted that support for crypto regulation cut across the Democratic and Republican parties and the House and Senate.
Ripple’s CEO namechecked the likes of Patrick McHenry, leader of the House Financial Services Committee; Glenn Thompson, the newly-elected leader of the House Agriculture Committee; House Majority Whip Tom Emmer; and the US representative for New York’s 15th congressional district, Ritchie Torres, as public proponents of blockchain technology and among those calling for clarity in the sector.
Congress has the foundation to kick off crypto regulation
Additionally, Garlinghouse pegged his optimism on the fact that Congress would not be starting the regulatory process from scratch. Instead, it would benefit from prior bills that have tried to address issues ranging from stablecoins to centralized exchanges.
Some of these bills, like the Securities Clarity Act, sought to create more explicit definitions of what digital assets constituted securities. The lack of clarity on the issue of digital securities led to several crypto companies being slapped with cease-and-desist orders by state regulators or being hit by class-action lawsuits from disgruntled customers.
While acknowledging that no single bill could satisfy all the players in the crypto industry, the Ripple CEO was quick to emphasize that the proposals already before Congress should serve as a basis for meaningful debate.
Garlinghouse used countries such as Brazil, Japan, Singapore, and the European Union (EU) as examples of jurisdictions with active crypto regulatory frameworks. He also pointed out that one of the United States’ biggest allies, the UK, was well ahead in its quest to regulate crypto.
However, the outspoken crypto billionaire decried the lack of coordinated global standards in crypto regulations, which, according to him, pushed crypto companies into countries with little, if any, regulatory practices, thus fostering situations such as the FTX collapse.
The building blocks for crypto regulation are already there, including President Joe Biden’s executive order to ensure digital assets’ responsible development. And with leaders like California’s Ro Khanna, Michigan Senator Debbie Stabenow, Arkansas Senator John Boozman, New York Senator Kirsten Gillibrand, Wyoming Senator Cynthia Lummis, and New Jersey Senator Cory Booker, Garlinghouse believes the will to act and change the status quo exists.
Ripple falls foul of regulatory opacity
It’s understandable why Garlinghouse wants crypto regulations finalized in the United States. His company, which also manages the global payment network RippleNet and the XRP cryptocurrency, was sued in December 2020 by the US Securities and Exchange Commission (SEC). It alleges that XRP was offered as an unregistered security.
The SEC said Ripple raised billions through XRP sales but did not comply with legal requirements by registering the offerings as securities. Ripple refuted the claims, insisting that XRP is a currency, not a security.
During a panel discussion in October at the DC Fintech Week conference, Garlinghouse stated that he expected the lawsuit against his company to be resolved in the first half of 2023 but acknowledged that it was difficult to forecast. As of this writing, there was still no indication of when the matter would be resolved.