The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has come under fire from the CEO of Ripple Labs, Brad Garlinghouse, for deciding which cryptocurrency tokens are securities.
Garlinghouse said in a tweet, “For the Chair of the SEC to assert that he dictates what is a security — and not the legislation from which his agency derives its power — is beyond comprehension. It’s time for elected officials in the U.S. to take notice. When you behave like an autocrat running a $2.2B bloated agency, why would you ever want to provide clarity about what’s ‘in or out’? Without clear jurisdiction, ambiguity masquerades as power,”
Gensler claimed that the current securities laws “cover most of the activity that’s happening in the crypto markets,” to which the Ripple executive responded by saying that this is untrue. The SEC chief was quoted as saying: “If Congress were to act, though I don’t think we need these authorities, not to undermine inadvertently through definitions of what’s in or out, or in essence allowing for conflicts that we don’t allow.” Gensler warned, “I think many of the legislative vehicles would if adopted, undermine the securities remit.”
The company has been embroiled in a legal dispute with the Securities and Exchange Commission (SEC) since the SEC filed a lawsuit against Ripple, Garlinghouse, and co-founder Chris Larsen in December 2020. Ripple and Garlinghouse have consistently argued that XRP is not a security, despite the SEC’s assertion to the contrary.
Additionally, there have been many complaints that the SEC does not provide clear regulatory guidelines, which makes it challenging for businesses operating in the cryptocurrency space to ensure compliance. Gensler has emphasized the importance of cryptocurrency exchanges and lending platforms coming in to discuss how to comply with the SEC on several occasions. Garlinghouse, on the other hand, has accused the SEC of meeting with crypto companies primarily to generate leads for its Enforcement Division.
A Wells notice was recently sent by the SEC regarding possible securities law violations to the Nasdaq-listed cryptocurrency exchange Coinbase. In its response, the company stated: “We tried to come in and register with the SEC, but they won’t let crypto companies.” Gensler, on the other hand, has frequently stated his belief that all crypto tokens, with the exception of bitcoin, should be regarded as securities.