Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), commented publicly for the first time on the court’s decision in the SEC v. Ripple case. He expressed his disappointment that Judge Analisa Torres decided that XRP is not a security.
Gensler made this statement, speaking at the National Press Club with a talk on artificial intelligence on July 17. He was asked if the decision affects his stance on cryptocurrencies and “whether it makes it necessary for federal legislation to clarify regulatory oversight in the industry.” Gensler answered :
“We are pleased with this decision recognizing the importance of protecting investors – institutional investors – and the court’s actions regarding fair notice, and while we are disappointed with what has been said about retail investors, we are still looking at and evaluating that opinion.”
Not surprisingly, he was asked similar questions later that day when Gensler said with Yahoo Finance, where he repeated almost the same words.
SEC pays special attention to protecting investors
Gensler reaffirmed the SEC’s mission to protect investors and promote capital accumulation. While he expressed satisfaction with the court’s fair notice decision, he expressed disappointment that XRP sales on exchange platforms are not classified as securities.
However, Gensler also pointed out that the SEC is still evaluating the court’s opinion, implying that the case is still pending. This suggests that the SEC may have further action regarding XRP and its regulatory classification.
The SEC chairman also pointed out the agency’s involvement in rulemaking procedures, which, we note, have been criticized in the crypto space.
He was asked if this would make him reconsider writing custom rules for cryptocurrencies, to which he said that “It’s too soon. That was three business days ago.” He also mentioned that the agency was involved in rule-making initiatives related to broker-dealers, exchanges, and escrow protection. Gensler’s statement suggests that the SEC is actively working to develop and implement clearer regulatory frameworks for various aspects of the crypto industry.
XRP lawsuit: consequences of Gensler’s statement
The outcome of the Ripple v. SEC lawsuit has broader implications for the classification of other cryptocurrencies under US securities law. In this case, the decision could set a precedent for future action by regulators and influence how other cryptocurrencies are treated.
At the same time, Gensler did not answer the question of whether the court’s decision would become a precedent for such cases, citing the fact that the case is still ongoing. This sparked widespread speculation that the Commission would appeal.
Regarding other lawsuits, he said that “these crypto platforms combine a number of services that […] we would not allow use in any other part of our capital markets.”
Gensler’s frustration may indicate that the US Securities and Exchange Commission continues to classify certain digital assets as securities, which could lead to increased regulatory scrutiny and compliance requirements across the industry.
In addition, Gensler’s announcement could also affect market dynamics and investor behavior. If investors take Gensler’s frustration as a signal of potential regulatory action or increased scrutiny, it could lead to market volatility or caution in XRP and other cryptocurrencies.
However, it is important to note that Gensler’s statement does not directly change the court’s decision or the ongoing litigation. The final outcome of the XRP lawsuit will be determined by the court in due course.