Critique on the Proposed Crypto Market Structure Bill by Ripple: Specifics
In a recent response to the U.S. Senate Committee on Banking, Housing, and Urban Affairs, led by Senator Tim Scott, the enterprise blockchain company Ripple has voiced its concerns about a draft Crypto Market Structure Bill. The company argues that the bill, as it currently stands, may not provide the regulatory clarity needed for the growth of the crypto industry.
Ripple supports the establishment of a clear regulatory framework for digital assets but criticizes the bill for creating more ambiguity rather than clarity. The company objects to the bill's potential for granting the Securities and Exchange Commission (SEC) excessive power by potentially regulating most tokens as securities, even those that traditionally fall outside SEC jurisdiction.
One of Ripple's key concerns is the bill's definition of "ancillary assets." According to Ripple, this definition could subject various tokens, including XRP, Ethereum (ETH), and Solana (SOL), to SEC oversight indefinitely. This perpetual oversight lacks a clear statutory endpoint and could discourage innovation, the company warns.
Ripple also advocates for a "grandfathering" exemption, excluding tokens that have been widely and liquidly traded for a long time from securities regulations. They propose a "safe harbor" rule treating tokens as commodities once established in the market for at least five years, aligning with the CLARITY Act approach, which better reflects the decentralized and mature status of these networks.
In addition, Ripple urges clear jurisdictional boundaries between the SEC and Commodity Futures Trading Commission (CFTC) to avoid overlapping or inconsistent regulation. The company also calls for federal preemption over state rules to prevent regulatory fragmentation.
Without these changes, Ripple argues, the bill risks hindering innovation and creating legal uncertainty rather than providing the regulatory clarity needed for crypto industry growth. The company has called for additional revisions to address these concerns and ensure a robust, liquid market is not disrupted by retroactive or ongoing government intervention.
- Ripple, in response to a Crypto Market Structure Bill draft, expresses reservations about the bill's potential for creating ambiguity instead of clarity in the regulatory landscape for digital assets.
- The enterprise blockchain company Ripple argues that the bill, as it stands, may grant the Securities and Exchange Commission (SEC) excessive power, particularly in regards to potentially regulating most tokens as securities.
- Ripple believes the bill's definition of "ancillary assets" could subject tokens like XRP, Ethereum (ETH), and Solana (SOL) to SEC oversight indefinitely, discouraging innovation due to the lack of a clear statutory endpoint.
- Ripple advocates for a "grandfathering" exemption, excluding tokens that have been widely and liquidly traded for a long time from securities regulations, and a "safe harbor" rule treating tokens as commodities once established in the market for at least five years.
- The company also urges clear jurisdictional boundaries between the SEC and Commodity Futures Trading Commission (CFTC) to prevent overlapping or inconsistent regulation, and federal preemption over state rules to prevent regulatory fragmentation.
- Without these changes, Ripple argues, the bill risks hindering innovation, creating legal uncertainty, and potentially disrupting a robust, liquid market through retroactive or ongoing government intervention.
