Ripple is the company behind XRP, whose executives have repeatedly criticized the lack of regulatory clarity in the US crypto industry and shared its legal framework, which aims to fuel innovation while protecting the interests of investors.
Ripple’s Proposal to Set Regulatory Standards for the Evolution of Cryptocurrencies
According to an announcement released on November 16, the San Francisco-based fintech company published a proposal to set regulatory standards that define the evolution of cryptocurrencies and digital assets. The proposal hopes for a regulatory environment that can capitalize on the untapped potential of cryptocurrency and blockchain technology.
The proposed framework, entitled “A Real Approach to Cryptocurrency Regulation”, suggests many measures that industry companies, consumers and other market participants can provide regulatory clarity. Ripple believes that collaboration and communication between public and private participants can create an effective policy framework. Ripple is ready to have an open dialogue with policymakers and provide expertise on encryption-oriented guidelines.
Ripple’s Head of Public Policy Susan Friedman stated that it is the reason they have proactively discussed the issue on a bipartisan basis with regulators and members of Congress. The conversations have helped shape their perspective on the type of regulatory clarity the industry and broader ecosystem need from regulators, as well as the type of requirements regulators should demand from the industry.
Ripple continues to cite the “Removal of Barriers to Innovation Act” as an important example of this active dialogue, which was passed by members of the House of Representatives in April but has yet to be dealt with by the Senate. The regulation provides for the establishment of a crypto working group for the US Securities and Exchange Commission, the Commodity Futures Trading Commission (CFTC) and fintech companies.
Ripple also suggested that the existing regulatory framework for the traditional financial services industry may apply to crypto-assets – but some changes are needed to better adapt to the unique characteristics of the emerging industry.
Finally, the company advocates cultivating an innovation sandbox that allows web developers to build within a specified time frame without being subject to strict US securities laws. Congressman Patrick McHenry introduced a safe harbor bill for digital currencies that shares some similarities with the previous proposal outlined by Bitcoin-backing SEC Commissioner Hester Peirce.
US Regulators and Crypto companies Development
Ripple believes the above proposal will fuel innovation and development of the US crypto industry rather than a case-by-case law enforcement approach.
In October, Coinbase called on Congress to replace the SEC with a federal regulator that will oversee the crypto industry. It’s worth noting that Coinbase and Ripple have both clashed with the US Securities and Exchange Commission in the past few months.
Though Ripple was still embroiled in a high profile lawsuit with the agency, Coinbase was forced to cancel the release of its Lend product after the SEC’s hesitation. Ripple executives have suggested moving from the United States to overseas where there are friendlier regulations.