Stuart Alderoty, Chief Legal Officer (CLO) of Ripple, recently spoke about the potential impact of a ruling on the securities status of the XRP token. This ruling, which favored Ripple in mid-July, could have significant implications for two ongoing cases initiated by the U.S. Securities and Exchange Commission (SEC) against Coinbase and Binance. Alderoty expressed his belief that the ruling will play a favorable role in these cases as well.
The ruling against the SEC’s allegations stated that Ripple and its executives had not engaged in unregistered securities offerings of XRP. Alderoty, in an interview on TechCrunch’s Chain Reaction podcast, explained that this ruling revolves around the relationship between sellers and buyers in securities cases. He argued that if the SEC claims that assets are securities in their own right, they will likely lose cases. Moreover, the ruling implies that the SEC does not have jurisdiction over exchange trades.
Alderoty emphasized that the SEC should not be surprised when they discover that something is not a security. In such cases, he stated that they should leave the conversation as they have no further role to play. Despite his optimism about the ruling, Alderoty believes that the SEC will continue its attempts to regulate the cryptocurrency sector through enforcement actions. While he acknowledged that the SEC could take further action regarding institutional sales of XRP, he emphasized that this action does not pertain to XRP’s status as a security.
The Future of SEC’s Regulation Efforts
Alderoty also discussed the possibility of the SEC appealing other aspects of the case. He believes that the SEC might not give up easily and may try to challenge certain parts of the ruling. However, he stressed that Ripple’s victory has established a precedent that could shape the outcome of future cases. This ruling implies that the SEC’s jurisdiction over exchange trades is limited, which could have broader implications for the regulatory landscape of the cryptocurrency industry.
While Alderoty believes that crypto investors should have protection, he also expressed the view that exchanges can engage in compliance through alternative means. This suggests that there are other ways for exchanges to ensure regulatory adherence without being subjected to the SEC’s strict oversight.
Ripple’s Relationship with XRP
Throughout the interview, Alderoty emphasized the distinction between Ripple and XRP. He clarified that Ripple utilizes XRP but did not create or issue the token. This separation is essential to understanding Ripple’s position in the ongoing legal battle. By emphasizing this distinction, Alderoty aimed to highlight that Ripple’s involvement with XRP does not automatically make the token a security.
The ruling in favor of Ripple regarding the securities status of XRP has the potential to impact other ongoing cases, including those against Coinbase and Binance initiated by the SEC. The ruling establishes that the SEC’s jurisdiction over exchange trades is limited, which could have broader implications for the regulation of the cryptocurrency industry. While Alderoty remains optimistic about the ruling, he anticipates that the SEC will continue its efforts to regulate the sector through enforcement actions. However, he also suggests that there are alternative ways for exchanges to comply with regulations, ensuring investor protection without relying solely on the SEC’s oversight.