Cryptocurrency company Ripple has recently reached out to the U.S. Securities and Exchange Commission (SEC) to seek clarification regarding the classification and regulation of payment stablecoins and tokenized securities. This letter follows a prior meeting with the SEC’s Crypto Task Force aimed at discussing pressing issues within the sector.
Ripple Seeks SEC Guidance on Stablecoins and Tokenized Securities
In a formal letter to the Crypto Task Force, Ripple called for a clear framework specifically regarding the use of stablecoins as collateral. The firm suggested that the SEC revisit Rule 15c3-1, providing guidance on how stablecoins can be effectively integrated on balance sheets.
Additionally, Ripple emphasized the importance of understanding the custodial requirements for clients’ stablecoins. They proposed that Rule 15c3-3 be amended to introduce a definition for “Qualified Payment Stablecoins.” The firm also requested that crypto assets classified as non-securities, beyond just Bitcoin and Ethereum, should receive similar treatment under regulatory frameworks. Ripple referenced the SEC’s recent classification of other cryptocurrencies as commodities, which provides a precedent for their suggestions.
To further enhance regulatory clarity, Ripple recommended an update to Question 4 in the SEC’s FAQ regarding crypto activities. They argued that any non-securities meeting the criteria of being readily marketable ought to be acknowledged accordingly. Moreover, Ripple requested the SEC to provide an analysis demonstrating how a 2% haircut for stablecoins does not align with industry standards. Their stance is that a stablecoin should undergo a 0% haircut, particularly when a mint-burn relationship exists between a broker-dealer and the token issuer.
In addressing ownership concerns, Ripple urged the SEC to clarify which ownership registry should be recognized, whether off-chain or on-chain, for determining legal rights. They advocated for designating the on-chain registry as the primary legal reference to reduce confusion arising from dual registries in digital assets.
The communication to the SEC was positioned as a follow-up to the discussions held on March 20, where Ripple and the Crypto Task Force delved into the regulatory treatment of payment stablecoins and tokenized securities, along with potential pathways for more comprehensive guidance in the future.
Ripple CEO Discusses Success Against Anti-Crypto Sentiment
In a recent social media post, Ripple CEO Brad Garlinghouse asserted that the so-called ‘anti-crypto army’ has been overcome by recent judicial rulings and public sentiment. He pointed out that initiatives against cryptocurrency often lacked rational policy and legal foundations. Furthermore, Garlinghouse argued that resistance to financial innovation mainly serves to protect outdated systems that no longer function effectively.
His comments came in response to a statement from former President Donald Trump, who criticized the former SEC Chair Gary Gensler and the anti-crypto faction for their detrimental impact on the U.S. crypto landscape. Trump indicated that his administration would work towards enacting the CLARITY Act, which seeks to establish clear regulatory frameworks to protect the cryptocurrency industry from future instability.
