Regulation
Ripple CEO Brad Garlinghouse on Cryptocurrency Regulation and the Impact of the 2024 US Election
On July 17, 2024, Ripple Labs CEO Brad Garlinghouse appeared on Bloomberg Television’s “Bloomberg The Close” to discuss how the 2024 U.S. presidential election could impact the cryptocurrency market. The conversation explored everything from regulatory clarity to international competition in the cryptocurrency space.
Cryptocurrency and Partisan Politics
Garlinghouse began by stressing that the issue of cryptocurrency regulation should never have become a partisan issue. He believes that all political parties should embrace technological innovation, given its potential to transform financial transactions by reducing costs and improving efficiency. He expressed frustration with the lack of regulatory clarity in the United States, noting that this has been a longstanding problem since before Ripple was sued by the U.S. SEC.
The Regulatory Landscape and the Role of the SEC
One of the main points of contention Garlinghouse has addressed is the ongoing regulatory uncertainty. He has criticized SEC Chairman Gary Gensler for perpetuating a conflict with the cryptocurrency industry. According to Garlinghouse, Gensler’s position that nearly all digital assets are securities has been repeatedly challenged and overturned in court. Despite these setbacks, the current administration continues its aggressive regulatory approach, which Garlinghouse argues is detrimental to the industry.
Interaction with the current administration
Garlinghouse mentioned his recent participation in a cryptocurrency roundtable in Washington, D.C., attended by key policymakers, including Senator Gillibrand and Anita Dunn of the White House. He noted a shift in the Democratic Party’s stance, acknowledging that they have lagged behind the Republican Party in supporting cryptocurrency innovation. This roundtable was an effort to bridge that gap and listen to the industry’s concerns.
Ripple’s Legal Battle and the Impact of Court Rulings
Reflecting on Ripple’s legal battles, Garlinghouse highlighted a significant ruling in which a judge declared that Ripple’s digital asset XRP is not a security. The ruling, which he described as formative for the industry, came despite vigorous arguments to the contrary from the SEC. The case underscored the need for clear and consistent regulatory guidance, which Ripple continues to support.
International Competition and US Regulatory Challenges
Garlinghouse expressed frustration that the U.S. is lagging behind other countries like the U.K., Japan, Singapore, and even the European Union, which have all established clear frameworks for cryptocurrency regulation. He lamented that regulatory ambiguity in the U.S. is driving entrepreneurs and capital to move to more crypto-friendly jurisdictions. This migration is driven by the clarity and certainty these countries provide, something the U.S. has yet to achieve.
Legislative efforts and bipartisan support
Despite the challenges, Garlinghouse noted that there is legislative momentum in the U.S., with both Democratic and Republican lawmakers working on cryptocurrency-related bills. He cited the recent passage of the FIT 21 Act in the House and ongoing discussions in the Senate. Garlinghouse hopes that with figures like J.D. Vance, who proposed a draft of the bill, there will be progress in establishing a robust regulatory framework.
Concerns Beyond the White House
Garlinghouse acknowledged that objections to cryptocurrency growth are not just coming from the White House. He cited concerns raised by the Federal Reserve and the Treasury, agencies that operate with some degree of independence from the executive branch. According to the Ripple CEO, these concerns have also contributed to the complex regulatory environment that cryptocurrency companies must navigate.
Ripple’s Ongoing Relationship With the SEC
Toward the end of the interview, Garlinghouse was asked about Ripple’s current relationship with the SEC and the possibility of settlement talks. While he couldn’t comment on specific discussions, he indicated that they are awaiting a final resolution on the issue of investment contracts sold to institutions. He remains optimistic about a positive outcome, but noted that the timing of the judge’s ruling is unpredictable.
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