Against the backdrop of the widely publicized legal duel between the United States Securities and Exchange Commission (SEC) and the blockchain company Ripple, one of the agency’s own commissioners has publicly denounced its tactics in the cryptocurrency sector as a territorial struggle.
Indeed, Hester Peirce, who is now well-known for publicly stepping out to criticize the regulator, has accused it of “regulation by ambiguity” and “jurisdictional maximalization” or launching cases – such as the one against Ripple – for the purpose of growing its mandate, as Wired reported on April 26.
Enforcing instead of guiding
According to the report, Peirce said that “one way to plant a flag is to bring enforcement action. It says: This is our space.” However, the main caveat of this practice, she stresses, is that the SEC has failed to provide proper guidance for crypto firms to stay compliant, leaving them in the dark instead:
“We haven’t done our job as a regulator. We have not provided a road to compliance. (…) [Businesses and consumers] have to be able to know whether they’re dealing with a security or not because when they don’t know, they can’t move forward—it paralyzes them.”
Furthermore, Peirce argues that such behavior by one of the US’s largest regulatory agencies undermines the country’s aspirations to be a center of technology innovation in finance as it is pushing companies away.
“It makes me sad because it’s about the capability of a regulator to deal with a new technology and asset class. (…) We’re showing ourselves to be incapable of making any accommodation for experimentation.”
Legal developments
At the same time, a legal expert and amicus curiae for the blockchain company, John E. Deaton, shared some of the contents of his Amicus Brief, in which he challenged the SEC to cite a single situation similar to what the agency is trying to prove in the Ripple case:
In particular, he highlighted that “when an asset is offered and sold as an investment contract, therefore a security, it does not transform the underlying asset itself into a security. [Oranges] remain [oranges], and XRP remains digital code.”
Meanwhile, the XRP community is waiting for the news on a Zoom hearing on class certification in the class action case filed against Ripple in 2020 before a court in the state of California, in which Ripple is accused of selling the XRP token as an unregistered security, as announced by defense attorney James K. Filan.
As things stand, XRP is currently changing hands at the price of $0.46, losing 2.22% on the day after seeing a sharp drop which saw it move from $0.48 to $0.44, but it looks to be recovering once again, trying to reverse the losses of 6.05% in the last week and 4.01% across the month, according to the latest data on April 27.
