By Tom Blitzer
Key Insights:
- SEC faces crossroads after XRP’s digital asset classification.
- Legal expert outlines four potential paths for SEC.
- SEC’s decision could set a crypto regulation precedent.
The recent ruling by Judge Torres, classifying XRP as a digital asset, has plunged the U.S. Securities and Exchange Commission into a state of ambiguity. This unexpected verdict has left the SEC grappling with its subsequent steps in the continuing case.
Navigating the Legal Labyrinth: Expert Insights
James A. Murphy, a seasoned cryptocurrency lawyer, has shed light on the possible paths the SEC could tread in the wake of this ruling. According to Murphy, the SEC has four potential options to consider.
Murphy posits that the SEC’s most likely action is to lodge a provisional appeal. This action necessitates that the SEC obtain consent from Judge Torres and the 2nd Circuit Court of Appeals to contest the ruling before the case’s conclusion. To be granted this consent, the SEC must demonstrate that the verdict presents a significant legal question, reveals considerable divergences in viewpoints and that an expedited appeal could significantly propel the case forward.
Murphy anticipates that the SEC will likely pursue this path, driven by increasing political pressure on SEC Chairman Gary Gensler to overturn the Torres decision. Moreover, the SEC’s broader “regulation by sanction” program, which targets the crypto industry, hinges heavily on reversing Torres’ ruling.
There are other alternatives available to the SEC. One option is to persist with the aid and abetting lawsuit against Ripple’s CEO, Brad Garlinghouse, and co-founder, Chris Larsen. Another possibility is for the SEC to drop the charges against Larsen and Garlinghouse and move forward with an immediate appeal, which wouldn’t require permission. Lastly, while a settlement is still on the table, Murphy views this as improbable due to the potential consequences of not challenging the Torres precedent.
The Future of SEC vs. Ripple: A Speculative Outlook
The upcoming weeks will be pivotal in shaping the future of the SEC vs. Ripple case. All eyes are now on the SEC to see how they react to Judge Torres’ ruling. The agency’s decision to file a provisional appeal, proceed with other legal avenues or consider a settlement will significantly influence the outcome of this high-stakes legal battle.
In a recent tweet, MetaLawMan, a legal expert, echoed Murphy’s sentiments, stating, “There’s a lot of debate about what the SEC will do next in the Ripple case. I believe there are at least 4 options under consideration…”
The crypto sphere is on edge, keenly observing the SEC’s journey through this complex legal maze. The verdict of this case has the potential to establish a benchmark for subsequent regulatory measures targeting digital assets, thus marking a significant milestone in the annals of cryptocurrency regulation. As a result, the forthcoming step by the SEC holds immense significance not just for Ripple and XRP but also for the broader crypto landscape.