With Washington recommitted to innovation, cryptocurrencies need a congressional fix

By Former Rep. George Nethercutt. June 20, 2021. (The Hill).

Congress just achieved a rare bipartisan feat in passing the “Endless Frontier Act” through the Senate. This bold legislative package recommits the U.S. to technological innovation and global leadership in the race against Chinese domination. At the very least, Republicans and Democrats understand that the U.S. must do more to win this fight. However, unless the Biden administration and Congress change their current attention deficit on cryptocurrencies, America’s efforts may be in vain.

Beneath the headlines and outside of the halls of Congress, federal bureaucrats are actively circumventing Congress and using the courts to regulate the U.S. cryptocurrency industry. The total lack of regulatory clarity in the Securities Act is the main culprit and consensus is building. This is especially evident to observers of the Securities and Exchange Commission’s (SEC) December 2020 lawsuit against San Francisco-based enterprise software company Ripple over its distribution of the cryptocurrency XRP.

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What The Heck Was Happening At Clayton’s SEC? Time For Some Answers.

By Jared Whitley. June 15, 2021. (Seeking Alpha).

While at the helm of the U.S. Securities and Exchange Commission (SEC), former Chairman Jay Clayton made a mess of the digital economy. Clayton’s actions in office resulted in stalling U.S. cryptocurrency and blockchain innovations, dampening a burgeoning industry, and enabling China to race out in front. Digital money is here to stay, and instead of making efforts to provide clarity and structure for the future of American-made innovation in this space, Clayton’s SEC kept everyone guessing on the rules while picking clear winners and losers among the biggest coins.

But what if Clayton’s approach was intentional? What if the lawsuits, the flip-flopping, and the uncertainty all weren’t from a lack of knowledge or resources but rather a well-thought-out strategy to advance his financial interests? Thankfully for us, Clayton and his deputies left behind a factual trail that can provide an opportunity for a course correction on U.S. crypto policy, as well as accountability if wrongdoing was indeed afoot.

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SEC Loses Bid For Ripple’s Legal Advice On Token Status

By Dean Seal. June 1, 2021. (Law360).

In the latest discovery defeat for the U.S. Securities and Exchange Commission in its landmark cryptocurrency case against Ripple Labs, a New York federal magistrate judge ruled that the agency cannot take a look at the advice the firm received years ago about its signature digital asset’s legal status.

U.S. Magistrate Judge Sarah Netburn on Sunday denied the SEC’s motion for access to documents related to legal advice Ripple received in 2012 about whether the sale of its token, XRP, was legally required to be registered with the securities regulator.

The judge sided with Ripple’s contention that those communications fall under attorney-client privilege and waved off the SEC’s argument that they would speak directly to Ripple’s defense that it “reasonably understood” that XRP was not subject to federal securities law.

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“Cryptocurrencies can help solve economic injustice. Democrats shouldn’t fear them”

By Sheila Warren and Michael Casey. May 28, 2021. (Roll Call).

When Joe Biden won the presidential election, he pledged immediately to begin working on behalf of the voiceless and the underserved: by rebuilding the middle class, heeding science to end the global pandemic and creating lasting recovery that delivers racial and social justice.

Now, with Biden in office and key appointments filled, Democrats have a chance to fulfill those promises. Cryptocurrencies and the revolutionary technology powering them present an unprecedented opportunity to help do so. 

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NOTE: Sheila Warren is the deputy head of the World Economic Forum’s Centre for the Fourth Industrial Revolution and a member of the forum’s Executive Committee. Michael J. Casey is the chief content officer for CoinDesk, a cryptocurrency news site, and a former columnist for The Wall Street Journal. Warren and Casey co-host CoinDesk’s Money Reimagined podcast.  

We Need A Ripple Test To Stop The SEC’s Overreach On Cryptocurrency

By Roslyn Layton. May 18, 2021. (Forbes).

The regulatory future of cryptocurrency seems destined to be decided by the courts, thanks to an ill-conceived lawsuit filed by the Securities and Exchange Commission. If Ripple’s arguments prevail in the Southern District of New York and on appeal, this case could give the Supreme Court a chance to review the 1946 Howey decision which set a standard for what constitutes a security. 

Courtroom Showdown

I’ve covered the SEC’s case against Ripple Labs case since it was filed by the SEC in December 2020 because it had all the hallmarks of classic enforcement overreach. Ripple and cryptocurrency investors have fought back with robust arguments while the SEC has stumbled and exposed its former leaders’ troubling conflicts of interest. It looks like something bigger than a mere lawsuit. The historical moment adds urgency to resolving whether XRP is a currency or security, a question which financial innovation makes difficult, but also demonstrates the SEC’s abuse of its authority.

The total market cap of all cryptocurrencies, including the XRP digital token at the heart of the Ripple case, tops $2 trillion dollars. The sum of these digital assets is now worth more than the total number of U.S. dollars in circulation. Global companies like Goldman Sachs and PayPal are racing to adopt the technology for consumer products. But more ominously, China has already rolled out a central bank digital currency (CBDC) called the Digital Yuan for domestic commercial and consumer use on a big scale. Mastercard has opened talks to act as a financial bridge for China to expand the Digital Yuan’s global network, export its applications and compete against both cryptocurrencies as the U.S. dollar in the emerging digital economy.

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“We are in a revolutionary period right now.”

May 11, 2021. (CBSN). Eric Lipton, Pulitzer Prize-winning investigative journalist for the New York Times, tells CBSN that U.S. regulatory uncertainty is causing major problems for the crypto industry, citing the lawsuit by the Securities and Exchange Commission against Ripple Labs, and its impact on XRP, as an example. The Biden Administration “has no choice but to confront” this problem, he says, adding: “We are in a revolutionary period right now,” he said. “The starting gun has gone off and we’re entering this period of massive transition” in the nature of money in general. It is not only from private sector cryptocurrencies, he says, but central banks are also developing sovereign digital currencies.

Watch the video clip of this news report here.

Ripple case seen as precedent for cryptocurrency regulation

By Keith Lewis. May 4, 2021. (Roll Call)

Cryptocurrency experts are closely watching a legal battle between Ripple Labs Inc. and the Securities and Exchange Commission, anticipating the case could establish precedent and clarify the regulatory landscape for digital coin offerings.

The SEC last year sued the company, CEO Brad Garlinghouse and Executive Chairman Chris Larsen in the U.S. District Court for the Southern District of New York, alleging they should have registered XRP under securities law. Ripple and its executives have asked the court to dismiss the case.

Ripple scored wins in preliminary rulings in the federal court, including gaining access to internal SEC documents and shielding its executives’ personal bank records from discovery. Holders of Ripple’s XRP cryptocurrency at issue in the litigation were also granted permission in April to intervene in the case.

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Cryptocurrencies Are Not a Fad, They’re a Revolution. America Needs to Prepare.

By Bill Tai. May 4, 2021. (Morning Consult).

In the mid-1970s, a cutting-edge group of hackers founded the Homebrew Computer Club in Silicon Valley. Their specialty was developing tools to break into the telephone systems of major corporations, and they went on to create innovative technologies that changed the world, generating millions of dollars in value along the way. One of those hackers was Steve Jobs.

It was in the days of an innovation economy that fostered risk and was free from crushing regulations that I found my start and built a career in technology, as did the founders of companies like Apple, Microsoft, Intel, and Cisco. The disruption of incumbents, however uncomfortable, placed Silicon Valley on the map and put the United States at the forefront of an economic revolution that forever changed the way we live.

As we near the end of the coronavirus pandemic and step into a new chapter of our nation’s economy, one that’s more digitally connected than ever before, we should create policies to foster this same sense of innovation within today’s tech sector. Under the new leadership of the Biden administration, America has an opportunity to take a fresh look at one such disruptive technology: blockchain and cryptocurrencies.

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With Crypto, Congress, Not Agencies, Should Decide What’s Next

By Andrew Langer. April 27, 2021. (The American Spectator).

Alongside the public’s newly found fascination with cryptocurrencies (which only sometimes includes their attempts to try and understand what they are — a process for the teacher akin to trying to explain to an AARP member how to program a VCR back in the day), there is serious debate and discussion among scholars and policymakers about how to look at them and treat them for public policy purposes.

From a public policy perspective, the question centers essentially on assigning “crypto” to one of four different categories. Are they

  • Securities? Are they a tradeable “financial instrument” that create some kind of ownership right?
  • Commodities? Are they some kind of raw material gained through a resource-intensive extraction process?
  • Currencies? Are they some kind of unit of exchange backed by some kind of hard asset?
  • Something different entirely, requiring a whole new vocabulary or public policy approach?

All are being considered, and each approach has its adherents and detractors.

The most logical route would be to view cryptocurrency as an entirely new thing (which it is). It doesn’t easily fit into any of the preexisting categories — it’s somewhere, honestly, between a commodity and a currency. Many cryptocurrencies do require intense resource utilization, but they can immediately be used as a standard of exchange.

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Cryptocurrency’s Future in the U.S. Is Threatened By SEC Action Against Ripple

By J. Carl Cecere. April 19, 2021. (Bloomberg Law).

Securities and Exchange Commission Chairman Gary Gensler has an important opportunity to undo actions taken in the waning hours of the Trump administration that threaten cryptocurrency innovation.

Back in December, outgoing SEC Chair Jay Clayton brought an unprecedented enforcement action against the enterprise software company Ripple, creator of the digital currency XRP—which was the world’s third most popular cryptocurrency, but not anymore.

The SEC’s lawsuit seeks billions in penalties from Ripple Labs Inc. and its executives. But the agency does not allege that any of its investors were defrauded.

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