tl;dr
Ripple has raised serious concerns about draft U.S. legislation regulating the crypto market, warning it may give the SEC excessive and unchecked authority over digital assets. In a letter to Senate Banking Committee Chair Tim Scott, Ripple's Chief Legal Officer Stuart Alderoty criticized the bill's...
Ripple has voiced significant concerns over the draft legislation aimed at structuring the crypto market, warning that it might grant expansive and unchecked authority to the U.S. Securities and Exchange Commission (SEC) over digital assets. In a letter dated August 5 to Tim Scott, Chairman of the Senate Banking Committee, Ripple’s Chief Legal Officer, Stuart Alderoty, emphasized that the proposed bill lacks the clarity necessary for the industry, particularly about SEC jurisdiction and the classification of tokens such as XRP. Ripple cautioned that this ambiguity could foster long-term regulatory uncertainty, ultimately harming both consumers and market participants.
The company highlighted that the bill’s definition of “ancillary asset” risks substantial SEC overreach, potentially subjecting digital assets that do not meet the criteria of securities to indefinite SEC oversight. Ripple called on Congress to establish clear jurisdictional boundaries, especially to delineate the respective roles of the SEC and the Commodity Futures Trading Commission (CFTC). Although the bill attempts to separate their authorities, Ripple argues that it instead generates confusion and risks overregulation.
Ripple’s correspondence also pointed out that tokens like Ethereum (ETH), Solana (SOL), and XRP might be indefinitely monitored by the SEC under the draft framework, even if these assets no longer qualify as securities legally. The concept of “ancillary assets” in the bill could grant the SEC sweeping powers, increasing legal and market instability. Ripple recommended adopting explicit classification criteria for digital assets consistent with the CLARITY Act’s approach, emphasizing consideration of the decentralized nature of mature blockchain networks not controlled by any central entity.
Further, Ripple expressed unease about perpetual SEC oversight of well-established digital assets. It argued that tokens traded on open, permissionless networks for over five years—such as XRP—should be presumptively exempt from securities regulation if they no longer display security characteristics. This stance reflects the decentralized ethos of blockchain technology, where no central party governs the asset.
Ripple underscored the urgent need for legislative clarity to replace reliance on SEC rulemaking, which could vary with future leadership and result in inconsistent enforcement. The company warned against a “regulation by enforcement” approach, highlighting its ongoing legal battle with the SEC as a cautionary backdrop. Ripple advocated for clear, non-vague federal laws to prevent arbitrary regulatory interpretations and suggested that federal legislation should override certain state regulations to foster a unified regulatory environment that supports innovation and investment in digital assets.