A recent Bloomberg article titled “Fight to Regulate Crypto at Crossroads as Ripple Ruling Looms” prompted a response from Ripple’s chief counsel Stuart Alderoty. The article, which was released yesterday, describes how the outcome of the Ripple v. SEC lawsuit, which is now pending, would specify which federal agency, out of the SEC and CFTC, should regulate the industry.
Regarding the legal dispute between the SEC and Ripple, Bloomberg stated:
“An upcoming ruling in New York federal court could help determine the answer, along with the fates of numerous crypto investors and companies. The case hinges on whether a prominent digital token should be treated as a security, which would fall under the Securities & Exchange Commission’s jurisdiction.”
According to statements from former SEC legal counsel reported by the major media outlet, the Ripple lawsuit’s fate will be determined by the collapse of the cryptocurrency exchange FTX.
In response to the article, Alderoty stated that the experts concur that the outcome of the case will impact the future of cryptocurrencies in the United States, regardless of how Bloomberg analyses the lawsuit.
“No matter how you dissect it, the experts agree — the outcome of the Ripple case will likely have a significant impact on crypto’s future in the U.S.,” he said.
The current Ripple case has drawn much interest from the XRP community and other cryptocurrency investors, highlighting the lawsuit’s importance to the American crypto market.
Regulation of Cryptocurrencies: Who Should Regulate It?
Who should oversee the cryptocurrency industry is a topic of continuing discussion. The SEC, led by Gary Gensler, is attempting to establish itself as the cop on the beat for the growing market despite leading industry figures like Brad Garlinghouse, CEO of Ripple, supporting the CFTC to take the lead as the legitimate regulator for cryptocurrencies.
According to a Bloomberg article by Carol Goforth, a professor at the University of Arkansas School of Law specializing in fintech regulation, if the SEC prevails in court, the regulator will assert jurisdiction over most crypto assets.
Nevertheless, Ripple’s victory would weaken the SEC’s assertion that it will take over oversight of the industry.
It is important to note that the SEC has received criticism from crypto stakeholders for the way it has regulated the sector. Industry participants, such as Alderoty, have charged the SEC with favoring enforcement over defining standards.
Arthur Jakoby, a former SEC attorney, criticized the SEC for its regulatory strategy in the crypto industry.
“Instead of engaging in transparent and public rulemaking, with industry comments, the SEC has chosen to mark its digital asset territory via the federal court system,” Jakoby noted.
In response to this criticism, Gensler has defended the clarity of the current financial industry regulations.
As both the SEC and Ripple request a favorable ruling from Judge Analisa Torres, a Ripple v. SEC action decision is anticipated in the year’s first half.