Ripple co-founder Chris Larsen is weighing in on how the U.S. Securities and Exchange Commission (SEC) is handling the crypto space.
In a new interview with Bloomberg Technology, Larsen the SEC’s recent legal defeats confirm the United States is taking the wrong approach to crypto regulation.
Most recently, a federal judge that the SEC has to reconsider Grayscale’s application to convert the Grayscale Bitcoin Trust into an exchange-traded fund (ETF).
“You saw in the latest challenge on the Bitcoin ETF, again SEC lost. But not only that, the judge really admonished the SEC, really called them out in a way that you don’t see very often. I think it’s just more proof of Gary Gensler’s decision of sort of engaging in this regulation by enforcement rather than getting clear laws. He knows they’re not clear. He just likes that lack of clarity so that he can go after anybody and make up the rules as he goes along through bullying.
And that’s not the American way. This should be at Congress. We should have clear rules from the legislature, not through the sort of unelected, power-hungry and really misplaced decision makers that you see in Gary Gensler.”
Larsen says the SEC’s lawsuit against Ripple is another example. The SEC sued Ripple in late 2020, alleging the San Francisco payments company was selling XRP as an unregistered security.
In July, a federal judge that Ripple’s automated, open-market sales of XRP, referred to as programmatic sales, did not constitute security offerings, contrary to what the SEC alleged.
The judge did, however, side with the SEC’s claim that Ripple’s sale of XRP directly to institutional buyers constituted a securities offering.
Larsen says America’s current approach to crypto regulation and enforcement is driving innovation in blockchain technology to other countries that have clearer regulations on digital assets.
“Unfortunately, when people, entrepreneurs ask I say, ‘Don’t start in the US, unfortunately. You could go to London, you go to Singapore, you go to Dubai – and this is not because they don’t have any rules. Quite the opposite. They have clear rules that protect consumers and also celebrate innovation.’
Why isn’t America leading that call? That’s what we’ve always been and we’ve got to get back to it. And by the way, that’s the engine that has made San Francisco what it is, and to have the federal government hamstringing us is just unacceptable.”