Ripple has presented new principles for regulating bitcoin in the United States. The suggestion comes despite Ripple’s own continuing legal struggle with the Securities and Exchange Commission.
Ripple, the firm that created XRP, has presented a set of rules for regulating the blockchain and cryptocurrency field, which it has labelled “a genuine approach to cryptocurrency regulation.” According to Susan Friedman, Ripple’s head of public policy, this proposed policy framework was developed in part through discussions with regulators and members of Congress, and Ripple CEO Brad Garlinghouse has stated that Ripple’s proposed measures provide benefits over “a regulation-by-enforcement approach.”
The plan proposes a three-pronged strategy: fostering public-private cooperation, adjusting existing regulatory frameworks, and creating what are known as bitcoin innovation sandboxes.
The drive for public-private cooperation pushes regulators to collaborate with cryptocurrency industry organisations and market players when developing policy or enacting legislation. Ripple cites a perfect example of this in action: the Eliminate Barriers to Innovation Act of 2021, which passed the House of Representatives in April but is now awaiting Senate action.
The second critical component of Ripple’s plan is to use already-existing acceptable regulatory frameworks by simply adapting them to better meet the unique characteristics of cryptocurrencies. Ripple praises the United States’ financial markets for being “best in class,” owing in part to “the present regulatory framework within which they function.” Ripple seems to believe that merely adopting existing standards might already give “the clarity innovators seek–and the market protection consumers deserve.”
To that purpose, Ripple supports both the Securities Clarity Act (SCA) enacted in July and the Digital Commodity Exchange Act (DCEA) established last year. The SCA, in conjunction with the DCEA, would distinguish “investment contract assets” from securities, while the DCEA would define (at the federal level) a “digital commodities exchange” and endow the Commodity Futures Trading Commission with jurisdiction and supervision (CFTC).
Finally, Ripple suggests cryptocurrency innovation sandboxes, which are “safe harbour” regimes that enable network developers to launch products and build networks “without having to comply with federal securities rules for a short period of time, provided certain requirements are satisfied.” The author of this piece possessed XRP, BTC, and numerous other cryptocurrencies at the time of writing.
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