2021-9-22 22:53 |
Key takeaways
The outcome of the SEC’s lawsuit against Ripple could define the future powers of the commission according to securities experts.The SEC’s regulatory methods have been called out by notable cryptocurrency figuresNeither the SEC or Ripple and the rest of the crypto-industry are willing to concede.To many observers and experts, the Securities and Exchange Commission (SEC)’s lawsuit against Ripple is billed to be a definitive cause for the entire cryptocurrency industry as its outcome can dictate the kind of powers the commission will hold over the industry.
This opinion has most recently been reiterated by sources reported on by Fox Business’s Charles Gasparino. According to him, securities experts he has been in contact with say that the Ripple case may come to be used as the basis for regulating the rest of the cryptocurrency industry, as well as the basis by which the regulatory powers of the SEC over the industry will be defined.
“The general consensus of securities experts is that the Ripple lawsuit will be a litmus test for how digital currency will be defined in the future, whether it’ll be treated like a stock, a commodity or its own type of currency, and if the SEC can regulate it in the aggressive manner envisioned by Gensler,” Gasparino says in a recent report.
The severity of the outcome of the case is no doubt recognized by both parties. Currently, the SEC is regulating the cryptocurrencies industry in a way that has been described by many, including SEC Commissioner Hester Pierce and U.S. Senator Pat Toomey, as “regulation by enforcement”. Instead of providing clarity for the industry, the SEC has taken to going after crypto-businesses with enforcement actions.
The SEC’s “regulation by enforcement” approach has seen them currently eyeing how to rein in multiple areas of the crypto space, including stablecoins, lending platforms, and decentralized finance, or DeFi. Already, the SEC has filed orders against the crypto-lending platform, Celcius. It has also threatened to take legal action against Coinbase should they continue with a planned lending program, leading to the exchange recently announcing that it was suspending the program. Similarly, in the DeFi space, the SEC is currently going after Uniswap. This has led to a general outcry from the industry accusing the SEC of stifling and driving away innovation in the young industry.
Irrespective, the commission is not relenting, with SEC chair Gary Gensler not looking likely to concede to the industry’s pressure. In prepared remarks delivered at an early August event, the chairman said, “We just don’t have enough investor protection in crypto … we have taken and will continue to take our authorities as far as they go.” Following this, he has been soliciting the intervention of the U.S. Congress to make laws that will broaden the commission’s authority.
Significantly, the cryptocurrency industry to has shown willingness to not give up without a fight. Notably, Ripple’s legal team recently revealed to Gasparino that it was not considering settlement as an option.
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