Brad Garlinghouse, the chief executive officer of Ripple Labs, has claimed the United States Securities and Exchange Commission, or SEC, has inconsistently imposed regulations on crypto firms in the country.
Speaking to Wired editor-in-chief at the Collision conference in Toronto on Thursday, Garlinghouse pointed to Ripple’s current legal battle with the SEC, in which the federal regulator has alleged the company’s executives conducted an „unregistered, ongoing digital asset securities offering“ with XRP token sales. Garlinghouse referenced the SEC’s approval of Coinbase’s public offering in April 2021 despite the fact the crypto exchange listed XRP at the time.
“The SEC now seems to take the position when they sued us that ‘XRP is a security and always has been’, but they approved Coinbase going public even though Coinbase is not a registered broker-dealer,” said the Ripple CEO. “There’s some contradictions here of the SEC almost not, within its organization, knowing left hand, right hand.” Garlinghouse added:
“The SEC, instead of doing the hard work to define a new set of clear rules, a new set of clear regulations […] they instead decide we’re going to do regulation through enforcement, which is not efficient and really I think has stifled innovation in the United States.”
Garlinghouse, Ripple co-founder Chris Larsen, and chief technology officer David Schwartz have all leveled complaints against U.S. regulators prior to and following the SEC filing its lawsuit against the firm in December 2020. Larsen suggested in October 2020 that Ripple might consider leaving the U.S. behind given many authorities’ policy of “regulation through enforcement” — the firm is currently headquartered in San Francisco, but also has offices in Dubai and Wyoming.
Related: Ripple counsel slams SEC for trying to bulldoze and bankrupt crypto
“I don’t think [crypto is] the Wild West at all,” said Garlinghouse, in response to SEC chair Gary Gensler’s characterization of the space. “I think crypto certainly is a volatile asset class […] All asset classes have a certain volatility — I don’t think it’s a regulator’s job to determine how that volatility should be accessed by consumers, by businesses.”
„I don’t think it’s the wild west at all.“ Ripple CEO @bgarlinghouse thinks the SEC isn’t painting crypto in the right light. pic.twitter.com/iO30gVafTn
— Cointelegraph (@Cointelegraph) June 23, 2022
The court case between Ripple and SEC is still ongoing, with many expecting the results to set a precedent for the regulatory treatment of cryptocurrencies in the United States.
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On Saturday, October 31st, 2020, Ripple CEO Brad Garlinghouse criticized the US Securities and Exchange Commission (SEC) during an interview with Fox Business, citing “contradictions” in the way the Commission regulates cryptocurrencies.
Garlinghouse spoke out against the SEC’s lack of clarity in their interpretation of the law, which has impacted cryptocurrency businesses across the country. In particular, he mentioned how two major companies, Coinbase and Avanti, have been allowed to issue regulated crypto assets, while other companies have been shut down or halted from offering similar products.
Garlinghouse noted that investors don’t trust the current crypto regulatory environment in the US due to inconsistencies and a lack of clarity, and that this is a hindrance to the growth of the cryptocurrency industry. He also asserted that the on-going legal battle between the SEC and Ripple (over accusations of selling unregistered securities) was indicative of larger problems.
The Ripple CEO argued that the lack of clear guidance from the SEC has created a barrier to innovation and competition, adding that if the SEC wants to remain an important regulator in the industry, they must “take a step back and evaluate” the current state of regulations.
Finally, Garlinghouse highlighted the need for greater consistency and clarity in the US’s cryptocurrency regulations, noting that if the Commission provided clear guidance, it would encourage more “constructive innovation” within the cryptocurrency industry.
Garlinghouse’s criticisms of the SEC reflect a growing movement in the industry for better and more consistent regulation. Until the Commission provides more clarity and consistency, the cryptocurrency industry in the US will continue to face difficulties.
