In recent hours, Ripple‘s CEO stated that he is optimistic about the SEC’s lawsuit against XRP. In particular, he said he feels very good about where his company is with respect to the law and the facts.
As a reminder, the ongoing legal dispute between the SEC and Ripple began in December 2020, when the SEC initiated legal action against Ripple. Specifically, the SEC alleged that Ripple raised $1.3 billion by offering Ripple’s native cryptocurrency, XRP, as an unregistered security.
SEC vs XRP, words from Ripple CEO Brad Garlinghouse
As anticipated, the CEO of Ripple, Brad Garlinghouse, said he is optimistic that the Securities and Exchange Commission (SEC) case against XRP will definitely be resolved in 2023.
Garlinghouse shared his views on the lawsuit filed by the US Securities and Exchange Commission (SEC) over the sale of XRP in an interview with CNBC on Wednesday at the World Economic Forum in Davos, Switzerland.
Noting that the judges will take as long as they want, Garlinghouse said:
“We are optimistic that this will definitely be fixed in 2023, and possibly the first half. So we’ll see how it plays out from here. But I feel very good about where we are with respect to the law and the facts.”
With respect to the lawsuit, Ripple argued that XRP is not a security. In addition, both the SEC and Ripple filed their latest set of briefs in December last year, seeking summary judgment on the case.
Ripple’s CEO said he expects a single-digit ruling to come in the next few months, adding that he does not expect Ripple to settle with the securities regulator.
Garlinghouse also stressed:
“We’ve always said we’d love to oblige, but it requires one very important thing, and that is that, looking forward, it is clear that XRP is not a security. The SEC and Gary Gensler have openly stated that they view almost all cryptocurrencies as a security. And so that leaves very little room in the Venn diagram for settling.”
The significance for Ripple of the outcome of the SEC vs. XRP case
SEC Chairman Gary Gensler has said on several occasions that Bitcoin is a commodity, but most other crypto assets are securities. For his part, Ripple’s CEO, well aware of the significance of the outcome of the Ripple lawsuit, said:
“Something I’ve heard time and time again here in Davos is how important this is, not just to Ripple, but also, really, to the entire cryptocurrency industry in the US.”
In addition, Garlinghouse stressed the importance of the fact that, outside the United States, cryptocurrencies are still thriving, as is Ripple. So, his suggestion is that we need to make sure that we continue to engage non-US regulators as well.
In a separate discussion with CNBC Garlinghouse said.
“From the beginning, I thought it was very clear that the facts were on our side, that the law was on our side, and I think as you’ve seen this game, as you’ve seen the court documents, the judge certainly is hearing our arguments.”
Gary Gensler’s statements regarding Bitcoin as a commodity
SEC Chairman Gary Gensler has previously clarified his position on cryptocurrencies, particularly Bitcoin, in an interview with Mad Money host Jim Cramer on CNBC.
Specifically, Gensler argues that crypto is a highly speculative asset class. In fact, the SEC chairman readily cited the ups and downs of this speculative asset class. Explaining that when people invest in Bitcoin and hundreds of other cryptographic tokens they are hoping for a return, just as when they invest in other financial assets, which are securities.
Bitcoin supporters obviously welcomed Gensler’s clarification. Digital asset manager Eric Weiss stated:
“Gensler is the second consecutive SEC chairman to declare Bitcoin a commodity, making it nearly impossible for this classification to be changed in the future. Very significant indeed.”
At that point, MicroStrategy’s pro-bitcoin CEO Michael Saylor also commented:
“Bitcoin is a commodity, essential to any treasury reserve business. This enables politicians, agencies, governments and institutions to support Bitcoin as a technological and digital asset to grow the economy and extend property rights and freedom to all.”
It is no coincidence that the Nasdaq-listed software company has amassed as many as 129,218 Bitcoin in its corporate treasury.
The dispute between the SEC and CFTC for authority over cryptocurrency markets
The question of which federal agency should regulate the cryptocurrency market has gained much attention recently. As we know, US SEC Chairman Gary Gensler has said that most cryptocurrencies and tokens are securities and should fall under the purview of his agency.
On the other hand, many people and lawmakers believe that it should be the Commodity Futures Trading Commission (CFTC) that regulates the crypto sector. In addition, three bills were introduced in Congress last year to make the CFTC the regulator of cryptocurrency markets.
Specifically, in this case, the chairman of the SEC argues that when people raise money they have to disclose various information, and that is how the markets work best. Thus, the SEC is very good at this, since, Gensler argues, that is what it does.
In the meantime, the CFTC has asked Congress for authority over the cryptocurrency market. CFTC Chairman Rostin Behnam explained last week that because the CFTC is a derivatives regulator, it does not currently oversee spot markets.
Therefore, he asked Congress for authority so that they can enter the Bitcoin Cash market, Ether market, and other digital commodity token markets.