With Coinbase on the verge of a lawsuit, regulatory clarity is once again the most pressing issue within the digital asset space even despite the extensive criticism against the SEC’s regulation-by-enforcement practice.
The cryptocurrency market seems to be shying from the all-time highs printed in the first half of 2021. Bitcoin fell sharply from the $52,000 area on the news that El Salvador had officially adopted BTC as legal tender.
Bitcoin dominance was clearly felt in the rest of the market as the other coins followed the move and, among the top 10 cryptos, XRP seems to be hurting the most. Trading at $1.09, Ripple’s digital asset is still down by -15% in the last 24 hours.
XRP remains in a limbo in the United States as the complaint filed by the Securities and Exchange Commission back in December 2020 forced cryptocurrency exchanges to delist it, thus making it impossible for users at those exchanges to buy or sell the crypto asset.
Exception made to ex-Ripple CTO Jed McCaleb, it seems, as the founder of Stellar (XLM) keeps selling his XRP holdings regardless of the SEC’s threats to whoever trades the digital asset.
All the compliance in the world may not be enough to satisfy the agency, however. Coinbase, who has swiftly delisted XRP, appears to be on the regulator’s eyesight.
“Last Wednesday, after months of effort by Coinbase to engage productively, the SEC gave us what’s called a Wells notice about our planned Coinbase Lend program”, said Paul Grewal, Chief Legal Officer at Coinbase, on the firm’s blog.
“A Wells notice is the official way a regulator tells a company that it intends to sue the company in court. As surprised as we were at the SEC’s threat to sue without ever telling us why, we want to be transparent with you about the course of events leading up to it.”
Regulatory clarity is once again the most pressing issue within the digital asset space even despite the extensive criticism against the SEC’s regulation-by-enforcement practice.
The SEC v. Ripple lawsuit is increasingly seen as the last stand against the agency’s behavior toward the ecosystem. The extraordinary and precedent-setting case seems to have broken the fourth wall.
Judge Sarah Netburn is probably keeping up with the XRP Army’s investigative work that is being shared online and that may compromise the SEC’s position in the lawsuit.
This grassroots movement emerging in the wake of the Ripple lawsuit has also caught the eye of U.S. Congressman Warren Davidson, who has recently tweeted: “There is a solution: pass the Token Taxonomy Act!”
Also from the political side is Senator Warren’s request to SEC Chair Gary Gensler regarding a regulatory framework for the digital asset space. That move shocked many as it seemed like an orchestrated powerplay against the CFTC.
As for the SEC v. Ripple lawsuit, the Judge is about to go forward with an in-camera review of the documents the SEC claims privilege.
Additionally, Ripple is demanding clear answers from the SEC regarding its questions on the Howie Test, the method used by the agency to ascertain whether an asset is a security or not. The outcome of the lawsuit may determine the survival of the Howie Test.
In May, attorney Jeremy Hogan explained why the Ripple lawsuit can save the crypto space from the SEC.