Ripple co-founder Chris Larsen considers how the US Securities and Exchange Commission (SEC) will handle the crypto space.
In a new interview with Bloomberg Technology, Larsen says the SEC’s recent legal defeats confirm that the United States is taking the wrong approach to crypto regulation.
Recently, a federal judge ruled that the SEC must reconsider Grayscale’s application to convert the Grayscale Bitcoin Trust into an exchange-traded fund (ETF).
Says Larsen,
“You saw again in the last challenge on the Bitcoin ETF that SEC lost. But not only that: the judge really warned the SEC, really called them out in a way that you don’t often see. I think it’s just more evidence of Gary Gensler’s decision to get involved in these regulations through enforcement rather than getting clear laws. He knows they are not clear. He just likes that lack of clarity so he can go after everyone and make up the rules while going through bullying.
And that’s not the American way. This should be in Congress. We need to get clear rules from the legislature, not from the kind of unelected, power-hungry and truly misguided decision makers you see in Gary Gensler.”
Larsen says the SEC’s lawsuit against Ripple is another example. The SEC sued Ripple in late 2020, alleging the San Francisco payments company sold XRP as an unregistered security.
In July, a federal judge ruled that Ripple’s automated, open-market sale of XRP, also known as programmatic sales, did not constitute a security offering, contrary to what the SEC alleged.
However, the judge sided with the SEC’s contention that Ripple’s sale of XRP directly to institutional buyers constituted an offering of securities.
Larsen says the current US approach to crypto regulation and enforcement is driving innovation in blockchain technology to other countries that have clearer rules for digital assets.
“Unfortunately, when people, entrepreneurs, ask, I say: ‘Unfortunately, don’t start in the US. You could go to London, you could go to Singapore, you could go to Dubai – and it’s not because they don’t have rules. Quite the opposite. They have clear rules that protect consumers and also celebrate innovation.”
Why isn’t America leading that call? We always have been and we must return to that. And by the way, that’s the engine that made San Francisco what it is, and it’s just unacceptable for the federal government to stand in our way.”
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