Ripple responds to Senator Toomey on XRP, the SEC, and how to do better
Senator Toomey has recently said “China’s authoritarian crackdown on crypto, including Bitcoin, is a big opportunity for the U.S. It’s also a reminder of our huge structural advantage over China.”
Ripple Labs has responded to Senator Toomey, who asked for feedback on crypto and blockchain laws. Stuart Alderoty, Ripple’s General Counsel tweeted a summary of the firm’s answer in three bullet points:
- encourage innovation sandboxes for crypto
- increased public-private collaboration
- engagement & consideration by the Senate of existing legislative efforts
“It all comes back to clear regulatory frameworks that allow innovation to flourish, with consumer and market protections. We don’t have clarity today in the US, despite those who insist on incorrectly suggesting otherwise. Thank you @SenToomey for engaging with the industry”, Mr. Alderoty added.
Ripple’s full response, which can be found here, and first introduces Ripple, its products, and XRP, the native asset to the open-source XRP Ledger.
“Although Ripple utilizes XRP and the XRP Ledger in its product offerings, XRP is independent of Ripple. The XRP Ledger is decentralized, open-source, and operates on what is known as a “consensus” protocol. While there are well over a hundred known use cases for XRP and the XRP Ledger, Ripple leverages XRP for use in its product suite because of XRP’s suitability for cross-border payments.”
The document addressed to Senator Toomey then mentions SEC’s April 2019 guidance and how even SEC Commissioner Peirce criticized it, comparing it to a Jackson Pollock work insofar as it “splash[ed] lots of factors on the canvas without any clear message.”
Ripple praises SEC Commissioner Peirce’s sandbox proposal
The letter also reminds that SEC Chair Gary Gensler, while at MIT, stated the issue was deserving of a “worthy public debate” and for XRP and other “big market cap” tokens “there needs to be clarity in the market.”
Ripple welcomes Commissioner Peirce’s proposal of a “safe harbor” under which network developers would be exempt for three years from the
registration provisions of federal securities laws, during which time they would be allowed to launch their products and develop their networks through token transactions.
If “network maturity” has been achieved at the conclusion of the three-year period, token transactions would not trigger securities registration requirements, under SEC Peirce’s proposal.
China’s crackdown on crypto is a “reminder of our huge structural advantage over China”, said Senator Toomey
The letter then focused on public-private collaboration as an essential element to achieving optimal outcomes instead of regulating innovation and job creation out of this country.
Senator Toomey is likely to agree with that since not only he is asking for feedback from blockchain companies but he has recently commented on China’s crackdown on Bitcoin.
“China’s authoritarian crackdown on crypto, including Bitcoin, is a big opportunity for the U.S. It’s also a reminder of our huge structural advantage over China.
“Beijing is so hostile to economic freedom they cannot even tolerate their people participating in what is arguably the most exciting innovation in finance in decades. Economic liberty leads to faster growth, and ultimately, a higher standard of living for all.”
Ripple calls Senate to consider two new proposed bills
Ripple’s letter then suggested the Senate consider the two new proposed bills: the Securities Clarity Act (SCA) and the Digital Commodity Exchange Act (DCEA).
“Both the SCA and DCEA seek to provide legal clarity to industry, markets and consumers in a way that an ad hoc, regulation by enforcement approach simply cannot.
“Moreover, these bills are an implicit acknowledgment that laws drafted for our legacy financial system cannot simply be overlaid on cryptocurrency and blockchain – rather, a tailored, flexible approach designed to address and remedy the specific challenges presented by this space is required. Ripple encourages the Senate to consider both the SCA and DCEA as they work to provide the certainty that is needed to keep industry within the United States while also maintaining the strong consumer and investor protections that have made American capital markets the best in the world”.