The CEO of Ripple, Brad Garlinghouse said that there are currently no prospects of a settlement with the SEC in the case against XRP.
He said this in an interview with Fox Business, in which he reiterated that there is a need for certainty for the cryptocurrency industry, regulatory clarity that for now is not there.
Brad Garlinghouse against the SEC: XRP is not a security
The interview also offered an opportunity to take stock of the relationship between the SEC and XRP given the lawsuit that has been going on since December 2020.
The SEC blames Ripple for being a security, and not a normal cryptocurrency like Bitcoin and Ethereum. With this belief, Ripple should have had specific authorisations to sell XRP. This position is not shared by Ripple’s CEO, who pointed out that the SEC’s job is not to determine winners and losers in the crypto sector.
Furthermore, Brad Garlinghouse stressed that the SEC’s job should be to protect investors. But when the SEC decided to sue Ripple, the price of XRP slid 70% and this led many investors to file a class action, the same investors that the authority was supposed to protect.
But why would XRP be a cryptocurrency and not an asset as the SEC understands it? To this question, Ripple’s CEO answered by explaining that Ripple’s technology, i.e. the XRP Ledger existed before the birth of the Ripple company.
Moreover, Ripple has never carried out an ICO, unlike Ethereum for example. What distinguishes Bitcoin and Ethereum from XRP is definitely the way they are minted. Bitcoin and Ethereum work with the Proof of Work consensus algorithm (although Ethereum is migrating towards Proof of Stake), while the engineers who created XRP sought to create a faster, scalable, efficient and cheaper cryptocurrency that is also more energy-efficient.
“Owning a lot of XRP and saying that’s a security is kind of like saying that oil is a security of Exxon or gold is a security of the largest gold mining company It just doesn’t make sense”.
Ripple, no agreement with SEC on XRP
At the moment there is a total clash between the SEC and Ripple. According to Brad Garlinghouse, there is no room for negotiation unless the authority recognizes a future for XRP:
“We can find a constructive path for the SEC, we of course want to find that. There’s no scenario, though, that we’re going to settle, unless there’s absolute certainty about what is XRP on a forward basis. And it’s very clear in how Ripple is using these technologies, how many many scores of other people in the XRP community are using these technologies, they’re not securities, they don’t represent an ownership in Ripple the company”.
The need for regulation
The heart of the problem is that there is a lack of regulatory clarity. Several players in the crypto industry argue that it is the Wild West. According to Ripple’s CEO, the industry deserves clarity. A lack of regulatory clarity is evident from the numerous pieces of legislation that the US Congress is working on.
According to Garlinghouse, the SEC probably wants more authority over the industry:
“When I’ve heard the SEC people come forward and say hey this is the wild wild west, it’s not regulated I think you the SEC may want more power over this”.
This lust for power is not a good way to help the industry. Clarity is needed so that the US can remain a leader in innovation. These are his closing words:
“I don’t think the role of the SEC should be to pick winners and losers, and there’s a lot of conflicts that I think we as an industry deserve and need the clarity so that the US can thrive in this industry, just as we did in the internet of information 20 years ago”.
In a tweet following the broadcast, Brad Garlinghouse reiterated his conviction. Ripple is on the right side of the law and the right side of history.
Instead of working with the industry, the SEC is using their meetings with companies as lead generation for their enforcement actions. Once the dust settles, it’ll be clear that Ripple’s on the right side of the law, and the right side of history. 2/2
— Brad Garlinghouse (@bgarlinghouse) September 25, 2021