This may be the year that the SEC’s enforcement authority over cryptocurrencies is settled in court, and the legal battle between the SEC and Ripple Labs is underway in the Southern District of New York, says attorney J. Carl Cecere. The SEC’s action is misguided, but the suit will test whether the commission has authority to regulate crypto as securities, which could determine the technology’s continued growth in the U.S.
Cryptocurrencies had a breakout year in 2021, which saw total cryptocurrency market cap rise above $3 trillion for the first time. And while crypto values declined since then, little suggests this is anything more than one of the temporary hiccups that have been happening since 2011 during cryptocurrency’s remarkable decade-long rise.
Now, more than ever, it is clear that the use case for digital assets and decentralized ledger technology have brought blockchain beyond mere speculation toward mainstream corporate adoption.And 2022 is set to be a year for critical legal and regulatory transition that could decide whether this remarkable technology’s growth path will continue accelerating in the U.S. or be diverted overseas.
Speculation and uncertainty originally created by the Trump administration’s failure to provide clear guidance on cryptocurrency regulation could be laid to rest, through one of the Trump’ administration’s worst crypto moves, a misguided enforcement action Trump’s SEC brought against the enterprise blockchain software company Ripple over sales of the cryptocurrency XRP.
This suit, which the SEC brought in the name of investor protection, saw retail investors lose $15 billion in value. And it tests whether the SEC has any authority to regulate cryptocurrencies, and whether its dangerous approach of regulation by enforcement should be allowed to continue.
The investing community had hoped the Biden administration would prove a steadier hand, provide some regulatory guidance on the scope of the SEC’s authority over cryptocurrencies, and end the misguided Ripple enforcement action. But Biden’s pick for the SEC, Gary Gensler, instead has doubled down on the previous administration’s mistakes.
So this year it looks like the SEC’s enforcement authority may have to be settled in court, in the legal battle between the SEC and its hard-fighting target, Ripple, currently raging in the Southern District of New York, which is likely to reach the U.S. Supreme Court.