Recently, the Securities and Exchange Commission (SEC) was dealt a potentially significant blow after a judge’s ruling in a case against Ripple’s XRP. The ruling, if upheld, may be the opening salvo in a coup against the SEC’s strategy of regulating cryptocurrencies through enforcement, signaling a shift in the perception of crypto’s role in the economic framework. Cue a furor among a small cabal in the nation’s capital who shared the dogmatic perception that all tokens are securities.
While the legal proceedings continue inexorably, the real spectacle unfolds away from courtrooms. It is the policymaking sphere. As Congress inches closer to crafting legislation that regulates cryptocurrencies, the situation in the district court serves as a pertinent backdrop.
The need for regulatory controls over cryptocurrencies has been a recurrent argument among both Republicans and Democrats in Washington. Acting as a check against fraud, illicit finance scenarios and destabilizing runs, these regulations serve to ensure that the crypto market doesn’t veer into uncharted territories. Policymakers and crypto naysayers have enjoyed an unlikely alliance, utilizing legal provisions to put roadblocks on the advancement of crypto assets.
However, the SEC’s once unassailable stronghold over crypto asset regulations has seen an unexpected turn. Faced with a landmark ruling, those opposed to crypto might find themselves beholden to legislative provisions that are more open to crypto than ever before. This shift could usher in a change in the hierarchy of power, with crypto-friendly Republicans on the House Financial Services Committee likely to have a bigger say on what the regulatory framework would look like.
This development marks a double-whammy for the SEC and its supporters, as this gloomy day may snowball into successive disappointments. If future court rulings mirror the Ripple case, the negotiating position of anti-crypto players may continue to slide, courtesy of having invested heavily in a legally untested strategic play. This loss would not only tarnish their negotiation advantage but also substantiate the negotiating prowess of their adversaries.
Ironically, the SEC’s crusade to quell cryptocurrencies in America seems to have backfired. It might actually trigger the creation of a bipartisan regulatory framework more accommodating to the growth of cryptocurrencies. Far from killing off crypto assets, they could become inexorably integrated into the country’s economy—a grim prospect for those who bet on stifling the crypto market.
Source: Coindesk
