- Professor Reiners has emphasized that Congress must address the regulatory gap on the cryptocurrency spot market.
- Reiners’ testimony about investment contracts is in agreement with Ripple’s claim that XRP should not be considered a financial instrument.
Stuart Alderoty has been appointed as Ripple’s Chief Legal Officer. responded The testimony of Professor Lee Reiners before Congress provided a unique perspective on the ongoing legal dispute between Ripple and United States Securities and Exchange Commission.
Reiners, who is both pro-SEC as well as anti-crypto, has acknowledged that the SEC recently lost the Ripple Case, highlighting three important factors of great significance to the crypto industry.
Prof. @leereiners Even though this pro SEC/anti cryptocurrency witness testified recently before Congress, he acknowledged both the SEC’s loss and the Ripple decision.
1. Only Congress has the power to close the regulatory gaps in crypto-spot market.
2. Securities…— Stuart Alderoty (@s_alderoty) September 20, 2024
Crypto Laws: Decentralization and Regulatory Gaps
Reiners began by identifying a regulatory gap that exists in the cryptocurrency spot market. He pointed out that the SEC and the Commodity Futures Trading Commission do not currently have jurisdiction over this industry. This observation shows a flaw in current regulation of cryptocurrency.
Reiners believes Congress Should take an active role in addressing this regulatory void. Alderoty, Ripple’s Alderoty, agreed and stressed the importance of legislation to address the evolving crypto ecosystem.
Reiners also made a strong argument for decentralization of securities law. Reiners criticized the notion that securities legislation should be based on an. “mystical” The former SEC director William Hinman, who spoke in 2018 about decentralization and the threshold for it, was cited as an example.
The crypto community has been sparked by this statement, especially because it implied that certain cryptocurrencies might be exempt from security restrictions if decentralization was achieved to a high enough level.
Reiners’ position is in line with that of the crypto industry as a whole, which has stated for years that decentralization shouldn’t be used to decide whether an asset should be classified as a security.
Reiners has also discussed the subject of investment contracts by citing the Howey Test, which was a landmark case involving orange groves. He asserted that orange groves are not securities in themselves, but rather the object of an Orange Groves investment contract. If something is to be considered as a security it has to have an accompanying management contract.
The central argument of Ripple is that XRP shouldn’t be classified as a financial instrument because it doesn’t meet the requirements for an investment contract.
Crypto Regulation and the Impact of SEC Leadership Change
Reiners said that one of the most memorable things he ever did was to say: “SEC chairs come and go,” It is implied that the landscape of regulation could change dramatically when there are changes in leadership.
The Ripple case is a good example of how regulatory interpretations can change over time. This means that future cases may have different outcomes. SEC A new approach to cryptocurrencies is taken by the leadership.
Although the crypto-community closely monitors the events in question, there is still some doubt about XRP’s fate, notably if the SEC appeals the Ripple Case verdict before October 7, 2024.
This lingering unease is currently putting downward pressure on XRP’s price. $0.5843 At the time this article was written, it represented a slight 0.55% The last 24 hours have seen a fall in the number of people.
SBI Holdings’ partner Ripple has, on the other hand made considerable progress researching the integration token-based deposits into central bank digital currency. CNF – According to the CNF reportSBI Holdings joined Project Agora to explore how tokenized deposits from commercial banks could be integrated into wholesale CBDCs in a single ledger.
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