The Commissioner of the CFTC, Caroline Pham, believes that the foundation of regulatory clarity has been laid down in court after the verdict of Ripple vs SEC. During a recent interview, Pham highlighted that big court decisions regarding the overall classification of crypto assets would eventually pave the way toward greater regulatory clarity. Pham also stated that she was looking forward to participating in regulatory working groups and hoped that US regulators would join hands to develop a holistic approach toward cryptocurrencies.
Thank you @BloombergTV for the opportunity to talk about our important GMAC initiatives! Beyond crypto, institutional markets & central banks are looking at tokenization of real assets like bonds. Today, we heard about international, US & EU developments & key takeaways. https://t.co/cWTShDy2Bf
— Caroline D. Pham (@CarolineDPham) July 18, 2023
‘You know, last year I said that we were going to see regulatory clarity first in the courts around the definition of a security, and I think we’ve seen that with some very big court opinions that have been released.’
These comments come a few days after Ripple secured a partial victory against the SEC in an ongoing battle where the regulator accused the firm of violating the securities law by selling an unregistered security. Judge Analisa Torres of the Southern District of New York ruled that the native token of Ripple, XRP, was not a security when sold to retail investors on crypto exchanges.
Gary Gensler Expresses His Dislike on the Verdict
The chair of the SEC, Gary Gensler, had a hard time swallowing the verdict and described it as disappointing. Over time, Gensler continuously suggested that all digital assets except Bitcoin are securities. However, the rest of the agency has not gone as far as making the same statements as him. There is also a possibility that SEC sends this decision for review.
Apart from that, Commissioner Pham also emphasized the importance of real-world asset tokenization. She mentioned the existence of real opportunities that would play a major role in modernizing financial markets through the tokenization of money market funds on the blockchain. Furthermore, a series of traditional finance companies have been boosting their engagement with real-world asset protocols, which has resulted in multiple RWAs outperforming DeFi assets.
Former CFTC Chair Believes Ripple Court Ruling Calls for Urgent and Compelling Regulation
Despite Ripple taking the win, the former chair of CFTC, Timothy Massad, believes that it is unlikely that the SEC and FTC would change their pattern for pursuing enforcement cases. Massad argued that the court ruling did not limit the scope of the Howey Test as the judge stated that institutional investors expected Ripple would use capital to improve its ecosystem.
Furthermore, the former chair mentioned that the SEC might consider an appeal of the decision or the possibility of lawmakers stepping in. At the same time, it was also highlighted that lawmakers unwilling to consider legislation impacting the space would be offered motivation via the case.