Ripple’s Chief Legal Officer (CLO), Stuart Alderoty, has recently ramped up his attack on the US Securities and Exchange Commission (SEC). Alderoty said that the SEC’s approach to describing cryptocurrency products as ‘crypto asset security’ is deceptive and has no legal basis.
This allegation was made when the SEC employed this term in a legal context. SEC sought to classify numerous crypto assets as securities.
As Alderoty notes, the term “crypto asset security” does not have a legal definition. This means that the SEC is using it to bend the law to its will. However, he argues that this term may confuse judges and cause them to give prejudiced legal verdicts.
SEC’s Stance on Crypto Regulations
Importantly, the SEC has been active in regulating the cryptocurrency market. Lately, it has been against the bankruptcy reorganization plan of FTX, a major crypto exchange that declared bankruptcy in 2022.
The plan entails repaying creditors in cash and stablecoins for a total of $16.3 billion. However, under the existing securities laws, the SEC has expressed concern about transactions in digital assets. Especially stablecoins linked to the US dollar.
In its legal battles, the SEC has referred to crypto assets as “crypto asset securities,” which means that even USD-backed stablecoins can be classified as such. As noted by Alex Thorn, the head of research at Galaxy Digital, this categorization has been a subject of debate.
Implications for Ripple and the Broader Crypto Market
Another key issue is the ongoing lawsuit between Ripple and the SEC, especially regarding the XRP token and the company’s entry into the stablecoin market. The company is set to launch its RLUSD stablecoin in the XRP ledger and the Ethereum platform. This is expected to raise the interest of the SEC and other regulatory authorities.
Furthermore, the SEC has characterized Ripple’s stablecoin in its legal documents as an “unregistered crypto asset.”
The SEC’s position on crypto asset regulation is essential for the entire crypto space as it may influence the creation of new crypto technologies. Ripple and similar companies will likely encounter more regulatory issues and challenges hindering innovation.
The Future of Crypto Regulation
Due to this, the legal environment surrounding cryptocurrencies and other digital assets is still unfavorable. The Ripple vs. SEC case outcome will probably set a precedent for how cryptos will be handled under U.S. securities laws.
The XRP price is $0.5664 as of the time of writing, and the coin has risen by 3% in the last 24 hours. The company’s market capitalization has also increased to $31,863,552,225. The trading volume within 24 hours has increased by 45.87% to $887,391,724, reflecting a high level of trading activity.
