Ripple’s chief executive officer, Brad Garlinghouse, has questioned the U.S. Securities and Exchange Commission’s (SEC) official stance regarding Ethereum (ETH). The CEO stressed the SEC’s “significant” setbacks in legal confrontations with the cryptocurrency industry in his commentary on X, noting that the regulatory body is “losing badly” in court.
Garlinghouse provided insight into the SEC’s tense relationships with industry players and other regulatory bodies, including the likes of the U.S. Commodity Futures Trading Commission (CFTC). According to him, this proves the SEC’s difficulty keeping up with its global regulatory peers, indicating a larger problem with the agency’s approach to regulating cryptocurrencies.
Garlinghouse further questioned the SEC’s strategy, rhetorically questioning the agency’s acknowledgment of its potential defeat in classifying ETH as a security. He drew parallels to the SEC’s past legal skirmish with XRP, where the regulator lost its case.
Garlinghouse’s comments were in response to Paul Grewal, Coinbase’s Chief Legal Officer (CLO), who expressed support for Ethereum on Wednesday. Grewal’s backing stemmed from Ethereum’s classification as a commodity, a stance supported by both the SEC and CFTC.
The Coinbase CLO argued that this status is key to overcoming regulatory hurdles that could stall the development of Ethereum Exchange-Traded Products (ETPs). He went on to highlight several instances that argue why ETH should not be seen as a security. Grewal also stressed the necessity of creating regulatory environments that facilitate Ethereum’s continued development and innovation.
These comments from major industry players come amid reports that the U.S. Securities and Exchange Commission (SEC) is deliberating on classifying Ether as a security. As part of this inquiry, the SEC has reportedly sent subpoenas to three companies. This action is tied to a probe into the Ethereum Foundation, the organization supporting the Ethereum blockchain network.
The conversation around Ethereum’s classification revives memories of the SEC’s attempt to label XRP as a security, an effort that concluded in July 2023 with a U.S. District Court ruling that XRP, in its essence, is not a security. Judge Analisa Torres found that while Ripple engaged in transactions that violated securities laws through its institutional sales of XRP, the digital asset itself does not meet the criteria of an “investment contract” or security.
Despite the setback in the XRP case, the SEC’s efforts continue. The agency is preparing to file its opening brief on remedies today, March 22. The document will remain under seal until March 26, when it becomes public.
