Ripple Court Decision Makes Regulation ‘More Compelling and More Necessary’ – Former CFTC Chair

Timothy Massad, former chairman of the United States Commodity Futures Trading Commission (CFTC), has said that although the Securities and Exchange Commission (SEC) v. Ripple court decision could affect the way businesses and lawmakers address crypto, regulatory clarity is needed. His call for still remains. Same.

In a July 7 op-ed with The Wall Street Journal, Messad and former SEC Chairman Jay Clayton suggested Lawsuits brought by the SEC and CFTC against crypto firms “are unlikely to quickly lead to significant improvements in investor protection and market integrity”. These comments came before a federal judge in the SEC v. Ripple case ruled in favor of the blockchain firm, suggesting that the XRP token was not a security.

Speaking to Cointelegraph on July 17, Massad argued that the court’s decision did not necessarily limit the scope of the Howie test — the standard by which the SEC identifies a security — because the judge said that institutional investors should “It was reasonably expected that Ripple would use the capital received from its sale to improve the XRP ecosystem and thereby increase the price of XRP. With respect to any potential issues surrounding Ripple’s holdings, the CFTC’s ex The chairman said the SEC could consider an appeal of the judge’s decision, or lawmakers could step in.

“This clearly shows that we cannot create a crypto regulatory framework through enforcement alone,” said the former CFTC chair.

Massad added that he believes the number of enforcement cases brought by the SEC or CFTC is unlikely to decline, even if the ruling takes XRP out of their purview. He proposed that the two regulators should work together to develop standards on crypto with the aim of providing investor and market protection either directly or through a self-regulatory organization.

Connected: Former SEC Official Says Ripple’s Decision Is ‘Troublesome on Multiple Fronts’

According to the former CFTC chairman, the case could provide impetus for some US lawmakers who previously were unwilling to consider legislation affecting the sector. Representatives of the House Financial Services Committee are currently considering a draft market structure bill, and Senators Cynthia Lummis and Kirsten Gillibrand reintroduced the legislation on July 12 with the aim of creating a comprehensive regulatory framework for digital assets.

“(The Ripple ruling) makes our argument more compelling and more urgent, meaning we cannot rely solely on enforcement to achieve the kind of investor protection standards we need.”

Massad served as CFTC chairman from 2014 to 2017 under US President Barack Obama. He has previously spoken in favor of regulatory clarity with regulators approving spot bitcoin (BTC) exchange-traded funds, issuing a central bank digital currency for payments in the United States, and growing the crypto space.

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