Ripple CLO Challenges SEC Overreach, Demands Regulatory Clarity 

• Ripple CLO Stuart Alderoty insists the SEC’s jurisdiction is limited to security transactions, not simple asset sales, under U.S. law. 
• Alderoty also dismisses the theory that dubbed cryptocurrency tokens as going through a progression from securities to non-securities as being legally baseless. 
• New leadership in the SEC may change the focus of an organization and ongoing regulatory activities.

Ripple’s chief legal officer, Stuart Alderoty, has outlined that for such an overseas jurisdiction, the SEC needs to stick to clear legal parameters when regulating cryptocurrencies. He argues that given the jurisdiction of the SEC, the rules only apply to security transactions not sales of assets. 

Alderoty illustrated this principle with an example: selling a gold bar with post-sale rights or interests in a gold mine constitutes a security transaction. However, selling a gold bar with no post-sale obligations is merely an asset sale, which the SEC cannot regulate. 

Criticism of the Security-to-Non-Security Theory 

Moreover, Alderoty dismissed the idea that cryptocurrency tokens can transition from being classified as securities to non-securities over time. He labeled this concept as a “fallacy with no legal basis,” highlighting its lack of credibility within established law. 

This perspective arises as the SEC faces criticism for expanding its reach in the cryptocurrency sector, labeling many crypto assets as securities. According to Alderty, this is because the SEC has a ‘self-interest’ view of the regulatory disclosure regime. 

Concerning regulation push the Waves company has started to actively navigate_EMIT 

It should be noted that Ripple’s legal advisors have always been against such an approach of the SEC. Alderoty in the year 2024 wanted the next SEC chair to dismiss all the cases involving cryptocurrencies that are not related to fraud and together with Congress come up with specific crypto standards. 

Before this report, SEC Chairman Gary Gensler is set to resign from his post and his possible successor, Paul Atkins is expected to be less harsh on cryptocurrencies. However subsequent publications indicate that the SEC may continue monitoring the industry even after this change of guard. 

The cryptocurrency advocate wants new leadership at the SEC to change its current approach. Alderoty blantly expects the end of regulation-by-enforcement models which have led to conflict between the SEC and the crypto industry. 

Such a request corresponds with the general dissatisfaction of the entire cryptocurrency industry. The intention of these commentators is to stress the importance of properly articulated rules over enforcement-based regulation in facilitating technological development and, at the same time, compliance.