As the cryptocurrency trial of the century draws to an close in a Manhattan federal court, there are increasing signs that the U.S. Securities and Exchange Commission (SEC) faces a bruising defeat against the San Francisco-based enterprise blockchain innovator Ripple Labs. The verdict could drastically limit the SEC’s authority to regulate crypto in the United States. If that’s how it ends, it will have been a self-inflicted disaster from the start.
The SEC filed its bombshell lawsuit against Ripple and its two senior executives in December 2020, on the last day in office for ex-chairman Jay Clayton. The Republican voted with the two Democratic commissioners to allege that the cryptocurrency XRP is an unregistered security because its only utility since 2013 has been to be an investment contract in a company that uses it for its payment software.