The Blockchain Association has filed an amicus brief in the case between the U.S. Securities and Exchange Commission (SEC) and payments company Ripple. The motion is a vehicle used by one of the parties to provide the court with additional information in support of the defendant (in this case, the payment company).
In late 2020, the Commission indicted Ripple for allegedly offering XRP, an unregistered security. The case helps determine the regulator’s stance on the cryptocurrency industry. The results could affect the industry and related companies for years to come.
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Ripple and its allies battle the SEC
In this sense, the Blockchain Association decided to take a stand against the SEC and its administration headed by President Gary Gensler. The group’s press release classified the committee’s actions as violations of U.S. law. Regulators are trying to regulate through “enforcement” rather than guidance, the statement said.
The first approach is seen as hostile to companies like Ripple and many other cryptocurrency companies facing legal action or being investigated by regulators. Kristin Smith, executive director of the Blockchain Association, called the SEC’s interpretation of current U.S. securities laws “arbitrary.”
Smith argues that the Commission is pushing to implement outdated interpretations of securities laws in a modern and innovative industry. As a result, Ripple et al were punished. Smith added:
That’s exactly the case with Ripple, which the SEC targeted nearly two years ago in an enforcement action alleging the cryptocurrency company failed to register Crypto tokens as securities. The SEC must obey the law and cannot impose its draconian vision on the entire cryptocurrency ecosystem through enforcement actions.
Furthermore, Smith claimed that Ripple’s fight with them was an opportunity to delay the regulator’s “agenda.” In addition, the case could push the modernization of U.S. securities laws.
Once worth, forever worth?
Jake Chervinsky, head of policy at the Blockchain Association, highlighted the organization’s stance on the SEC. Regulators are “hurting” cryptocurrency companies and investors in these projects, Chervinsky said.
In the case between Ripple and the SEC, the payment company provided evidence that it intended to cooperate with the regulator. The company sought advice and guidance from the committee as early as 2014 when it was working on RippleNet.
However, the committee allegedly ignored their request to classify XRP or any Ripple-related project as a security. In that sense, Chervinsky said, the regulator, led by Gensler, assumes its rules are clear to all involved.
Those who don’t meet their standards can be dragged into a legal battle. The blockchain association’s policy chief calls this behavior “applied governance.” Chervinsky added:
The views of the SEC are wrong in law and policy (…). The fatal flaw in the SEC’s position is its inability to distinguish between primary sales and subsequent transactions in the secondary market (…). The fatal flaw in the SEC’s position is its inability to distinguish between primary sales and subsequent secondary market transactions.
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