Cryptocurrency Regulation: Cryptocurrency: Is the SEC Facing a Crushing Defeat in the Ripple Process? How the ruling could affect the crypto sector. news

Krypto-Regulierung: Kryptowährungen: SEC vor vernichtender Niederlage im Ripple-Prozess? So könnte sich das Urteil auf den Kryptosektor auswirken
• Are cryptocurrencies securities?
• Can Howe’s test be applied to cryptocurrency classification?
• Has Ripple Labs won the stage?

According to some legal experts, the SEC is on the verge of a historic defeat that could have a devastating impact on the SEC’s future role in crypto regulation, as the ruling could severely limit the SEC’s powers to regulate the crypto sector. . What will be the impact of the SEC on cyber currency?

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Ripple’s test

In the SEC process against Ripple, which has been ongoing since December 2020 for not being registered securities trading As with the XRP token since 2013, the SEC has been asked several times to prepare previously classified documents, internal emails, and drafts of the 2018 Hinman speech. Ripple’s defense is focused on these documents as they seek to prove that XRP is not a security. According to Forbes, former SEC Director of Corporate Governance William Hinman used Ethereum in his 2018 speech that the cryptocurrency is not a security because the ledger has become “decentralized” over time. Ripple was recently able to record a breakthrough here: the so-called Hinman documents were to be published by the SEC – the material, however, remains confidential, said lead lawyer Stuart Alderotti.

security question

Ripple CEO Brad Garlinghouse wrote via Twitter that he does not believe the SEC when it claims to be acting in the interests of transparency and disclosure and that the humility of action becomes clear when the truth comes out. Garlinghouse was referring to a post by Ripple’s lead lawyer Stuart Alderotti, who insisted that the fight was worth it considering the Hinman documents.

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During the proceedings, the US Securities and Exchange Commission could not prove that the cybercurrency was linked to the company’s performance and that the purchase of the cryptocurrency represented an investment in the Ripple company. According to Forbes, even his own expert had to admit that the SEC could not prove his case.

Thousands of XRP token holders then attempted to interfere in the proceedings and also asked the responsible judge to make them defendants in the proceedings. It rejected an intervention, but recommended that supporters write the so-called Amici Brief instead. Meanwhile, 12 such AMC letters have been submitted. According to lead counsel Stuart Aldrotti and CEO Garlinghouse, this is an exceptionally high number at this stage as supporters feel the SEC is causing massive damage to the crypto economy.

What could be the consequences of the decision?

According to Forbes, Ripple’s chief counsel is willing to pay a repeated fine to reach an agreement with a potential authority. However, the condition for this is that the supervisory authority states that the XRP token as of today is not a security. However, SEC Chairman Gary Gensler is determined to stick with the process, even if there is no convincing argument so far.

The SEC wants to continue to use the so-called Howe test to classify cryptocurrencies, as buying cryptocurrencies “is about investing money in a joint venture, with a reasonable expectation of profit from the efforts of others”. BeInCrypto cited the definition. However, a decision (possibly even an appeals decision) could completely reverse the basis of the Howe test for classification of cryptocurrencies. It would also question the ability of the SEC as a regulatory authority.

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