Ripple Propose How Crypto Industry Should Be Regulated In The U.S.
Payment giant Ripple recently released proposed guidelines for crypto regulation in the United States. The proposal is introduced while the company still has an ongoing lawsuit with the Securities and Exchange commission.
Ripple has released a set of guidelines for regulating the blockchain and cryptocurrency industry that is called, “a real approach to cryptocurrency regulation.”
According to Susan Friedman, Ripple’s head of public policy, the proposed policy framework has been conceived of in part through discussions with regulators and members of Congress.
Ripple CEO Brad Garlinghouse said that Ripple’s proposed measures offer advantages as compared to “a regulation-by-enforcement approach.”
The proposal suggests a three-pronged approach: encouraging public-private collaboration, adapting regulatory frameworks that already exist, and cryptocurrency innovation sandboxes.
The public-private collaboration encourages regulators to work together with crypto industry and market participants when making policy or legislating. Ripple points out a prime example of this in action, the Eliminate Barriers to Innovation Act of 2021, which passed in the House of Representatives in April but is pending in the Senate.
The second point is to take advantage of the sensible regulatory frameworks that already exist by tailoring them to better fit cryptocurrencies’ unique aspects. Ripple says that U.S. financial markets are “first in class,” partly due to the existing regulatory framework under which they operate. Ripple suggests that adapting frameworks that already exist could provide the clarity innovators seek, and the market protections consumers deserve.
To this point, Ripple advocates for both the Securities Clarity Act (SCA), which was introduced in July, and the Digital Commodity Exchange Act (DCEA), which was introduced last year. The SCA, complementary with the DCEA, would differentiate “investment contract assets” from securities, and the DCEA would define (at the federal level) a “digital commodity exchange” and grant authority and oversight to the Commodity Futures Trading Commission (CFTC).
Third and last point in the proposal is innovation sandboxes for cryptocurrencies, which are “safe harbor” regimes that allow network developers to launch products and develop networks for a limited period of time without needing to comply with federal securities laws, provided certain conditions are met. The idea of a sandbox is that once the innovation has been tested in the sandbox environment, it will either adapt to existing regulation or new regulatory framework is created for it.
