“When we think about a cryptoasset as being a security what we’re doing is we’re saying it’s being sold as part of an investment contract.”
SEC Commissioner Hester Peirce, also known as “crypto mom”, has said the ongoing lawsuit opposing the Securities and Exchange Commission and blockchain company Ripple Labs could add to regulatory clarity.
Ms. Peirce told Bloomberg TV what is the SEC’s intention when filing a complaint against a firm for an unregistered securities offering.
“When we think about a cryptoasset as being a security what we’re doing is we’re saying it’s being sold as part of an investment contract. It doesn’t mean that the asset itself necessarily has to be a security. It means that it was being sold as a security.”
The SEC complaint, filed on 22 December 2021, doesn’t seem to mention that broader view. This is how the first paragraph goes:
“The Securities and Exchange Commission announced today that it has filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.”
Throughout the lawsuit, the regulator has claimed that Ripple’s XRP is a security due to its centralized nature and so, it falls under its regulatory scope.
Ripple says it never held an ICO nor its digital asset can be defined as a security since its utility is proven every day across the globe as it is used for cross-border payments.
In April, the U.S. House of Representatives passed a bill that is meant to set up a digital asset working group to provide regulatory clarity in the crypto industry.
The “Eliminate Barriers to Innovation Act” mandates the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to work together as the “SEC and CFTC Working Group on Digital Assets. A report would be submitted within a year. The bill was introduced in March by Rep. Patrick McHenry (R-North Carolina).
This past week, the House Committee on Financial Services has launched a Digital Assets Working Group of Democratic Members, said Congresswoman Maxine Waters (D-CA), the Chairwoman of the committee at the first hearing held by the Task Force on Financial Technology.
“As cryptocurrencies, central bank digital currencies and other digital assets enter the mainstream, the Committee will look at how digital assets have begun to enter many aspects of our lives – from payments to investments to remittances – and consider how to devise legislation to support responsible innovation that protects consumers and investors while promoting greater financial inclusion”, Ms. Waters stated.
Being composed only by Democrats, the working group might only be able to go so far in its assertions and proposals. Still, it seems that the United States Congress is finally moving forward and taking initiative.
The anxiety-ridden SEC v. Ripple has recently seen the fact discovery deadline being extended by 60 days. This alters the predictions regarding the end of the lawsuit (updated agenda).
Attorney Jeremy Hogan, a popular member of the XRP community, shared his thoughts on the timeline and a date for a summary judgment.