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- The new SEC chairman Gary Gensler took office a few days ago but while some XRP holders were hopeful he would bring a more lenient perspective into the Ripple case, it is business as usual.
- Following his announcement, the House of Congress has passed a bill that could lead to clarity for the SEC and CFTC in what is a brewing battle between the regulator and the crypto industry.
There have been two major twists to the SEC vs Ripple case. On one hand, a New York judge has granted Ripple access to Jay Clayton’s information on his involvement with One River Asset Management. Jay Clayton was the former SEC chairman and was heading the agency when the case against Ripple was filed. It has been Ripple’s belief that the case was personally or politically motivated. With this in mind, since Clayton left the SEC, he has been hired by One River Asset Management which has $2.5 billion in crypto under management. Ripple is hoping to find a connection that exposes Clayton and gets the case dismissed.
SEC and Ripple ready for another round
The SEC, on the other hand, is seeking an order limiting discovery to external communications regarding market views of XRP, Bitcoin, and ether according to defence lawyer James K Filan who is close to the matter. This is the SEC’s response to the 19 custodians identified by Ripple Defendants. In particular, it could lead to Clayton’s personal emails.
The SEC noted,
The defendants’ approach is part of a pattern of gamesmanship with respect to discovery and the following examples show that Defendants do not actually seek relevant evidence, but rather seek to harass the SEC, derail the case’s focus away from its merits, and bog down the SEC with document review.
Ripple only yesterday requested an additional two days to respond to the SEC order. With the SEC’s consent, Ripple is now expected to respond on Wednesday, April 28, 2021.
Just before Gensler took charge, there was optimism that the SEC would back down. In fact, Ripple CEO Brad Garlinghouse had suggested that he would be open to a sit-down with the watchdog. This is not looking like the case with both camps arming themselves for the next round.
In the last 24 hours, XRP has shed 10 percent and slipped further from the desired $2 position. At the time of press, it is exchanging for $1.28 with a 25 percent loss in the last 7 days.
Regulatory clarity is coming
The US Congress has recognized the need for a robust innovative industry, especially with digital assets. One of the measures is through the Eliminate Barriers to Innovation Act. The U.S Congress through this could eventually introduce clear crypto regulation. The house directed the Commodity Futures Trading Commission [CFTC] and the Securities and Exchange Commission [SEC] to jointly establish a digital asset working group.
This working group would be made up of the SEC, CFTC and members of fintech companies involved with digital assets. They are set to review the current regulations and how these can be improved. This is a key step in the evolution of the industry.
