The regulatory landscape surrounding cryptocurrency trading in the U.S. is facing renewed scrutiny. Brad Garlinghouse, CEO of Ripple which is embroiled in a legal battle with the U.S. Securities and Exchange Commission (SEC) over XRP, has publicly questioned the regulator’s focus on Ethereum (ETH) after losing the war against XRP.
Garlinghouse’s comments, which were a response to comments from Coinbase Chief Legal Officer (CLO) Paul Grewal, come amid reports that the SEC is investigating whether Ethereum should be classified as a security. This classification would subject Ethereum to stricter regulations under U.S. securities laws.
The SEC picked fights with the industry and is losing badly in the Courts. They’re now fighting fellow regulators like the CFTC, and falling behind international counterparts. At what point will the SEC realize they will lose the war against ETH just as they lost against XRP? https://t.co/rG66npldf4
— Brad Garlinghouse (@bgarlinghouse) March 21, 2024
Read Also: Ripple CEO Says XRP Clarity Has Somewhat Opened Up the U.S. Market
Similarities to the XRP Case
Ripple’s ongoing legal dispute with the SEC began with the regulator claiming that XRP was an unregistered security. Ripple fought against this argument, and a court ruling from July 2023 agreed with Ripple, determining that non-institutional sales of XRP are not securities offerings. Garlinghouse suggests that the SEC’s potential move to classify Ethereum as a security could be following a similar path to the XRP case.
Concerns Over Regulatory Clarity and International Consistency
Industry experts have emphasized the need for clear regulatory frameworks for cryptocurrencies. A lack of clarity can stifle innovation and create uncertainty for businesses operating in the space.
Additionally, Garlinghouse highlights concerns that the SEC’s approach might not be consistent with international regulatory efforts. This inconsistency could place the U.S. behind other countries with well-developed regulatory frameworks.
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Potential Impact on the Crypto Industry
The potential classification of Ethereum as a security could have significant ramifications for the cryptocurrency industry. Increased regulatory burdens could deter investment and slow down the development of Ethereum and other blockchain technologies. Slowing down the crypto industry in the U.S. will hinder competitiveness in the global blockchain landscape, significantly impacting the global market’s progress.
Read Also: “XRP is Not Just Any Crypto” – Wall Street Expert Shares Opinion
The regulatory environment surrounding cryptocurrency in the United States remains in flux. Although XRP’s status is unchallenged, other cryptocurrencies don’t enjoy the same status.
Garlinghouse’s comments highlight concerns about the SEC’s approach to regulating Ethereum. The SEC has to find a clear, consistent, and internationally aligned regulatory framework, as this will be essential for the continued growth of the crypto market.
The debate surrounding the SEC’s approach to regulating cryptocurrencies is not new. A judge in the XRP lawsuit called out the hypocrisy in the SEC’s arguments. Finding a balance between protecting investors and fostering innovation will be crucial for the responsible growth of the cryptocurrency ecosystem in the U.S.
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