In a brief exchange on Twitter, Ripple’s CEO, Brad Garlinghouse, and its Chief Legal Officer, Charles Gasparino, recently shed light on the controversy surrounding the cryptocurrency industry and the role of the Securities and Exchange Commission (SEC). The conversation sparked after Ripple’s Chief Legal Officer posted a thread on the former Director of Corporation Finance at the SEC, Bill Hillman’s speech, to which Gasparino responded:
Fascinating stuff. I know the knee jerk from the #XRP community will be this proves a “fraud.” It doesn’t. It does prove @HesterPeirce’s argument—we need a safe harbor in #Crypto; we need to stop regulation by enforcement and Congress needs to set digital-coin ground rules NOW https://t.co/6154tvKMTo
— Charles Gasparino (@CGasparino) June 13, 2023
The SEC’s stance on XRP and its handling of cryptocurrency regulation has led to calls for clearer guidelines and regulations in the industry. Gasparino echoed these sentiments, emphasizing the need for a “safe harbor” in the crypto space.
Further, he emphasized that the reaction from the crypto community shouldn’t be to label these regulatory inconsistencies as fraud. Instead, he highlighted the need for Congress to step in and set clear digital currency ground rules. He urged an end to regulation by enforcement, a practice that has mired the U.S. crypto industry in uncertainty and stifled innovation.
In his response to Gasparino, Garlinghouse critiqued the SEC’s handling of cryptocurrency regulation, stating:
I think we can all agree that our government should act with integrity. The SEC – despite the industry asking for clarity – is actively approaching crypto in bad faith.
Garlinghouse’s comments come five years after Bill Hinman gave a controversial speech at the Yahoo Markets Summit. In his speech, Hinman stated that Bitcoin and Ethereum were not securities because they were “sufficiently decentralized.” This statement was significant, as the SEC had not provided clear guidance on how they classify digital assets at the time.
Hinman’s speech has been a point of contention due to his ongoing connections to the Enterprise Ethereum Alliance (EEA), an organization dedicated to driving the use of Ethereum, which was not disclosed at the time of his speech. Hinman’s comments led Ripple and others in the industry to believe that XRP, a cryptocurrency that operates on a decentralized blockchain, was not a security and, therefore, outside the purview of the SEC.
However, in December 2020, the SEC filed a lawsuit against Ripple, alleging that XRP was a security and that sales of the cryptocurrency constituted unregistered securities offerings.
