Ripple Labs CTO David Schwartz said that the United States is not prepared to regulate new industries such as cryptocurrency.
He said the recent reaction of US regulators toward the crypto industry could ultimately hurt new fast-growing industries.
David Schwartz described that agencies such as the Securities and Exchange Commission (SEC), Financial Crimes Enforcement Network, and Commodity Futures Trading Commission can not reach a consensus on what constitutes a security versus a currency in terms of digital assets.
As a result, many crypto and blockchain related companies operating within the US have a lot of uncertainty about the regulations of their business activities.
According to Schwartz, it is currently very difficult to find out the exact laws that apply to the companies dealing in crypto and blockchain. You generally see less problems in other countries, because crypto market is regulated by a single entity Outside US.
“It’s very difficult to figure out which laws apply and how they apply to something new,” said Schwartz. “That you generally don’t see in other countries — there’s some entity that makes the rules and at least you know you’re talking to the right party.”
Schwartz added the following:
“The United States is one of the few countries where there’s this very palpable risk that the regulators will turn to you and say, ‘That thing that you were doing for five years, in public and complete light of day? Well, you should have known it was illegal all along.”
Schwartz’s response is not unexpected. Ripple is in the middle of a lawsuit against the US SEC. SEC filed a lawsuit against the crypto company last December. According to them, Brad Garlinghouse’s firm sold unregistered XRP tokens.
Since the news, Ripple’s XRP token has been temporarily suspended from various US cryptocurrency exchanges. The global money transfer service MoneyGram has also paused its collaboration with Ripple.
However, according to Ripple, XRP tokens are cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). These cryptocurrencies are classified as commodities by the US SEC. This allows legal trading of crypto in the country.
It is shocking that SEC filed a case against Ripple after 8 years of Ripple Birth.
“My number one recommendation to U.S. regulators is: look at the rest of the world and don’t get out of step.”
Thanks @onceatraveler for having me on to talk about how NFTs can solve practical problems and why U.S. regulators need to take cues from the rest of the world to keep up w/ global crypto innovation.
— 𝘋𝘢𝘷𝘪𝘥 "𝘑𝘰𝘦𝘭𝘒𝘢𝘵𝘻" 𝘚𝘤𝘩𝘸𝘢𝘳𝘵𝘻 (@JoelKatz) April 9, 2021