The Ripple Effect: SEC In A Tight Corner With Other Of The Regulator’s Stance Against Crypto

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XRP Ruling
The most important part of this ruling: “XRP, as a digital token, is not in and of itself a “contract, transaction[,] or scheme” that embodies the Howey requirements of an investment contract.” This is now a matter of law (not up for trial.) — Brad Garlinghouse (@bgarlinghouse) July 13, 2023

The SEC has argued that many cryptocurrencies, including XRP, are securities because they are investments in the efforts of their developers. However, the judge in the Ripple case ruled that XRP does not meet the definition of a security under the Howey Test, which is a legal test used to determine whether an investment is a security.

SEC In A Tight Corner
The SEC is now in a precarious situation. If it continues to assert that other digital assets are securities, it could be met with similar legal disputes. Yet if it surrenders and categorically states that XRP is not a security offering, it must significantly adjust its approach in regulating the crypto space.

SEC’s Controversial Approach
Right from the start, the SEC’s stance on cryptocurrencies has been grounds for debate. The agency has been reproached for having a heavy hand in its actions against providers of some services and proposals regarding digital assets, and for not providing obvious instructions to businesses which are looking to flaunt the law.

The Ripple affair is a major exam for the SEC, and the results of this process could have a tremendous effect on cryptocurrency regulation in the United States. Here are some of the consequences of the ripple-SEC process-:

  • Making it more difficult for the SEC to pursue in regulating cryptocurrencies in the future,
  • Causing other ventures to challenge and resist the SEC’s influence,
  • Begotten extra court disputes in opposition to the agency from exchanges of digital assets,
  • Compel the SEC to have an overhaul of its approach in regulating cryptocurrencies.

Final Thoughts
Despite the hurt the SEC saw in the Ripple case, it is still a genuine agency and is not likely to retreat. This tribulation has created a stumble for the SEC and the reaction to it has generated a discussion in the crypto space which would be particulary interesting to survey.

Disclaimer: This isn’t financial or trading services. Always investigate a venture before buying cryptographic monetary forms or potentially in any funds involved services.

Robert Wilson author
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