Ripple’s Policy Chief Clashes With SEC Chair Gary Gensler On Crypto-Securities Compatibility

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The ongoing debate between the SEC and Ripple continues to draw attention as the crypto market is filled with controversies regarding crypto securities. Ripple’s Policy Chief recently entered the fray, taking issue with the views expressed by Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), on the compatibility of cryptocurrencies and securities. 

Susan Friedman Slams Gary Gensler’s Views On Crypto

Ripple, a significant player in the blockchain and cryptocurrency space, has long been at odds with the SEC over the classification of its native digital asset, XRP. The SEC argues that XRP should be treated as a security, while Ripple maintains that it is a currency. The ongoing legal battle has made headlines, as it could potentially set a precedent for the classification of other digital assets after the highly anticipated summary judgment. 

Recently, SEC Chairman Gary Gensler took to Twitter to express that there is no incompatibility between the crypto markets and securities laws. He highlighted the SEC’s objective of aligning the cryptocurrency space with existing regulations, ensuring that digital asset investors enjoy the same protections as those in traditional markets.

In a recent public statement, Ripple’s Policy Chief criticized Gensler’s stance on cryptocurrencies, arguing that the SEC Chair’s views are overly restrictive and false. Susan Friedman pointed out that, in contrast to securities, cryptocurrencies typically don’t entail a financial claim on the issuer and can be settled in real time without intermediaries. 

She argues that these distinctions necessitate tailored regulations rather than blanket statements asserting that a one-size-fits-all approach is the most appropriate course of action.

XRP Investors Wait For The Final Outcome

The crux of the disagreement between Ripple’s Policy Chief and Gensler lies in their divergent interpretations of the Howey Test, a legal framework used to determine whether a financial instrument qualifies as a security. Ripple believes that the Howey Test, which was established in the 1940s, is outdated and ill-suited to the unique characteristics of digital assets. 

Attorney Bill Morgan emphasized that the US SEC’s own expert conceded that since mid-2018, the price movements of the two largest crypto assets, Bitcoin and Ethereum, can account for up to 90% of Ripple’s native token price fluctuations. Despite this, the notion that Ripple Labs’ substantial XRP holdings imply that the XRP ledger (XRPL) is centralized and that XRP constitutes a security continues to endure.

He stated that in the event of a split decision in the XRP lawsuit, the judge could rule that XRP sales conducted after mid-2018 were not considered securities.

Although Gensler and Friedman may hold differing opinions on the specific regulatory framework to be applied to the crypto market, they both appear to concur that some degree of regulation is essential for safeguarding investors and maintaining market integrity.


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