Ripple co-founder Chris Larsen is considering how the US Securities and Exchange Commission (SEC) is handling the crypto space.
In a new interview with Bloomberg Technology, Larsen says the SEC’s recent legal defeats confirm that the United States is taking the wrong approach to crypto regulation.
Most recently, a federal judge ruled that the SEC must reconsider Grayscale’s application to convert the Grayscale Bitcoin Trust into an exchange-traded fund (ETF).
says Larsen,
“You saw in the last challenge on the Bitcoin ETF again that SEC lost. But not only that: the judge really warned the SEC, really called them out in a way that you don’t often see. I think it’s just more evidence of Gary Gensler’s decision to get involved with these regulations through enforcement rather than getting clear laws. He knows they are not clear. He just likes that lack of clarity so he can go after everyone and make up the rules as he goes through the bullying.
And that’s not the American way. This should be at Congress. We need to get clear rules from the legislature, not from the kind of unelected, power-hungry and truly misguided decision-makers you see in Gary Gensler.”
Larsen says the SEC’s lawsuit against Ripple is another example. The SEC sued Ripple in late 2020 because the San Francisco-based payment company sold XRP as an unregistered security.
In July, a federal judge ruled that Ripple’s automated, open-market sale of XRP, known as programmatic sales, did not constitute a security offering, contrary to what the SEC claimed.
However, the judge concurred with the SEC’s claim that Ripple’s sale of XRP directly to institutional buyers constituted an offering of securities.
Larsen says the current US approach to crypto regulation and enforcement is pushing innovation in blockchain technology to other countries that have clearer regulations for digital assets.
“Unfortunately, when people, entrepreneurs, ask, I say, ‘Unfortunately, don’t start in the US. You could go to London, you could go to Singapore, you could go to Dubai – and it’s not because they don’t have rules. Quite the opposite. They have clear rules that protect consumers and celebrate innovation.”
Why is America not leading that call? We always have been and we must return to it. And by the way, that’s the engine that has made San Francisco what it is, and it’s simply unacceptable for the federal government to hinder us.”
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