While the cryptocurrency sector awaits a resolution in the prolonged Ripple lawsuit, Venture Capitalist Adam Cochran recently expressed his concerns on Twitter regarding the Securities and Exchange Commission (SEC) ongoing delay in formal rulemaking for digital asset transactions. He said that the current pace at which the SEC is embarrassing to the United States.
He also brought to light how the SEC Chair Gary Gensler has referred to past cases to support the notion that rulemaking processes lasting 10 to 20 years are considered acceptable.
His tweet suggested that at present, there is growing concern that innovation in America is facing significant challenges. Curiously, while these innovative sectors face regulatory pressures, there have been instances of OCC regulated banks experiencing failures that have resulted in the potential loss of user deposits. This situation raises doubts about the stability and reliability of the traditional banking system.
“One can appreciate that new technology can be challenging to understand the implications of and merits time to study. Which is why despite crypto being created in 2010, it took other US regulators time to respond – but, respond they did.”
While other departments have been able to clarify their positions, the SEC Chair has been reluctant to provide clear guidance on digital asset transactions. This lack of guidance from the SEC has raised concerns and frustrations within the industry. This projection suggests that the United States may lose its competitive edge in the digital asset space if regulatory clarity is not provided in a timely manner.
The legal dispute between Ripple and the SEC, which commenced in December 2020, revolves around the SEC’s assertion that Ripple did not register approximately $1.4 billion worth of XRP as securities. The outcome of this lawsuit carries significant implications for the broader cryptocurrency industry.
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Recent news reports have speculated that the new US Securities and Exchange Commission (SEC) Chair, Gary Gensler, may be dragging his feet on the Ripple lawsuit. Ripple, a cryptocurrency platform, is being sued by the SEC for allegedly selling unregistered securities. With Gensler focusing his attention on rulemaking, the case against Ripple could take years, and possibly as many as 10-20 years, to resolve.
Gensler, who was appointed in the spring of 2021, is an experienced financial regulator, having formerly served as chair of the Commodity Futures Trading Commission (CFTC) and professor of global economics and management at the Massachusetts Institute of Technology. He is credited with providing much-needed reform to the US derivatives markets and creating important regulations in the years following the 2008 financial crisis.
As SEC chair, Gensler is now focusing on setting new regulations to ensure investor protection, ensure fair, orderly, and efficient markets, and avoid excessive risk in the financial system. He has already proposed rules to increase transparency in the cryptocurrency market and put an end to potential market manipulation.
Although Gensler is undoubtedly focused on setting market rules and strengthening investor protection, it is unclear if he is neglecting the Ripple case in order to pursue his priorities. The SEC is known for taking years to resolve cases, and the Ripple lawsuit could potentially take an additional 10-20 years depending on how complicated the case turns out to be.
Gensler has only just become SEC chair and has yet to make any public comment on the Ripple case. It remains to be seen whether his rulemaking process will draw attention away from the Ripple lawsuit or if his focus on investor protection and market transparency will help resolve the suit more quickly.
In any case, Gensler’s commitment to reform the US financial markets and protect investors is clear. Whether the Ripple lawsuit will take 10-20 years to resolve is still an open question. Investors, however, can be assured that Gensler is doing his best to make sure the markets are fair, efficient, and secure.