Ripple CEO Brad Garlinghouse criticized the SEC’s approach to crypto regulation at the company’s Swell conference in Dubai on Thursday. Garlinghouse told CNBC that the SEC has “lost sight of their mission to protect investors” through their ongoing lawsuit against Ripple.
The lawsuit alleges that Ripple conducted an unregistered securities offering through sales of its XRP cryptocurrency. Garlinghouse believes the SEC’s enforcement actions are stifling innovation in the crypto industry, hindering its growth and potential.
“The SEC is doing the same thing over and over again. And they think, I guess, they’re gonna get a different outcome at some point,” he said.
Garlinghouse pointed to a recent court ruling on Grayscale’s bitcoin ETF application as another example of the SEC overstepping, where an appeals court said the SEC was “arbitrary and capricious” in rejecting its ETF applications.
“Generally, judges tend to be pretty down the middle and try to not be dramatic — those are damning words. So I think at some point, the SEC has to step back and realize that their approach of regulation through enforcement, let’s just bring lawsuits, that has to break,” said Garlinghouse.
He hopes the Ripple case will be a “thawing of the permafrost” in crypto regulation and lead to clear federal laws passed by Congress rather than constant litigation. The next key step in Ripple’s case is a 90-day remedies-related discovery process ordered by the court.
Garlinghouse believes industry-wide regulation is needed for crypto and blockchain to reach their full potential as an “amazing industry that has immense potential” in the U.S. economy.