Ripple’s Chief Technology Officer (CTO) David “JoelKatz” Schwartz expressed concerns about the U.S. Securities and Exchange Commission’s (SEC) interpretation of “cryptocurrency asset security.” The dispute highlights ongoing tensions between the cryptocurrency industry and regulators.
This debate appears to have lasted longer than expected and is becoming more thorny with each passing moment. Read on for the latest twist.
Breaking down the SEC battle
Schwartz’s main argument revolves around the SEC’s approach in the context of the Wahi lawsuit. He argues that the SEC’s definition of cryptocurrency assets is more related to tokenized stocks and does not accurately reflect the nature of assets transferred via distributed ledger technology. He argues that tokens, unlike traditional securities, are not contracts, transactions or schemes and therefore must be subject to different legal standards.
Also Read: SEC-Ripple Lawsuit Was Much Bigger Than XRP, Claims John Deaton
asset debate
Exploring the meaning of “asset,” Schwartz explains that the term encompasses more than just the physical items of a transaction. He used the example of selling apples to demonstrate that the transaction also involves legal rights and challenged SEC Chairman Gary Gensler’s broad classification of cryptocurrency products as securities. This view is part of Ripple’s broader challenge to the SEC’s regulatory stance.
Read more: Why did Gary Gensler do a U-turn on cryptocurrencies?
court battle: Judge Torres and Howey Test
The legal landscape was further complicated by Judge Torres’ court ruling that programmatic sales of XRP did not qualify as a security under the Howey test. In contrast, Gensler argues that the SEC’s interpretation is sound. XRP advocate Bill Morgan criticizes the SEC for using vague language to advance its regulatory agenda.
In a world of ever-changing cryptocurrency rules, the Ripple-SEC showdown highlights the difficulties of adapting new technology to existing rules. As this drama unfolds, the cryptocurrency crowd is on edge to see how it will shake up the entire industry.