David “JoelKatz” Schwartz, Ripple’s Chief Technology Officer, has expressed concerns over the U.S. Securities and Exchange Commission’s (SEC) interpretation of “crypto-asset security.” This dispute highlights the ongoing tension between the cryptocurrency industry and regulatory bodies.
This debate seems to have gone on longer than anyone anticipated and it continues to get trickier at every turn. 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 contends that the SEC’s definition of crypto-assets resonates more with tokenized stocks and does not accurately reflect the nature of assets transferred via distributed ledger technologies. He argues that tokens, unlike traditional securities, are not contracts, transactions, or schemes and thus should conform to different legal criteria.
Also Read: SEC-Ripple Lawsuit Was Much Bigger Than Just XRP, Argues John Deaton
The Asset Debate
Delving into the semantics of “asset,” Schwartz illustrates that the term encompasses more than just the physical item in transactions. He uses the example of selling an apple to demonstrate that the transaction also involves legal rights, challenging SEC Chair Gary Gensler’s broad classification of crypto products as securities. This perspective is part of Ripple’s broader challenge against the SEC’s regulatory stance.
Read More: Why Did Gary Gensler Do a U-Turn on Cryptocurrency?
Legal Battle: Judge Torres and the Howey Test
The legal landscape is further complicated by a court ruling from Judge Torres, stating that XRP’s programmatic sales do not qualify as securities under the Howey Test. Contradicting this, Gensler maintains that the SEC’s interpretation is valid. Pro-XRP lawyer Bill Morgan criticizes the SEC for using vague terms to push its regulatory agenda.
In the ever-changing world of crypto rules, the Ripple-SEC showdown shows the struggle of fitting new tech into old rules. As this drama unfolds, the crypto crowd is on the edge, waiting to see how it might shake up the whole industry.
