Brad Garlinghouse, CEO of crypto company Ripple, recently voiced criticism of the US Securities and Exchange Commission’s (SEC) approach after the release of the Hinman documents.
It is worth recalling that these documents include discussions that took place within the institution prior to the famous 2018 speech given by the SEC division’s former chief financial officer, William Himan.
Specifically, Garlinghouse claimed that during his tenure as a public official, Himan “received millions of dollars in compensation from his law firm,” suggesting a conflict of interest in his speech.
See below for full details.
Garlinghouse, CEO of crypto company Ripple, vs the former SEC official
As anticipated above, Brad Garlinghouse, CEO of crypto specialist Ripple, recently released a video in which he makes critical comments on the contents of Hinman’s documents.
These documents include internal agency discussions prior to a speech given in 2018 by William Hinman, a former director of the Division of Corporation Finance of the US Securities and Exchange Commission (SEC).
According to Garlinghouse, the documents, which were only made public after numerous requests and significant legal fees, highlight that “senior officials disagreed on the law” and informed Bill Hinman that the rules on cryptocurrencies would be even more confusing to the public.
Garlinghouse also suggested that, at worst, the documents indicate that Hinman “deliberately ignored the law,” as they read:
“While a public servant, Hinman received millions of dollars in payments from his law firm, which was part of an alliance with others who had a vested interest in this speech.”
Garlinghouse: “SEC exploited my transparency to turn against Ripple”
Thus, Ripple’s CEO accused the SEC of adopting a hypocritical “open arms, get in and register” policy.
In fact, in his video statement, he revealed that he had meetings with former SEC Chairman Jay Clayton and Hinman, answering all their questions and being open about the company’s activities.
However, Garlinghouse explained in detail that the SEC exploited this transparency to target Ripple. Furthermore, Garlinghouse stated the following:
“At no point was it suggested to me that XRP was considered a security”
In other words, Ripple’s CEO believes that the SEC is trying to stifle crypto innovation in the United States by exploiting the absence of regulatory clarity to exert its jurisdiction over the entire cryptocurrency industry, as he had previously mentioned.
On the other hand, Brian Armstrong, CEO of Coinbase, one of the largest US-based cryptocurrency exchanges, has also been sued by the SEC on charges of acting as an unregistered securities broker, and has warned about the dangers of pushing the cryptocurrency industry out of the country and the potential costs of repatriation in the future.
China is among the top beneficiaries with respect to US crypto regulation
As anticipated, Brian Armstrong, CEO of Coinbase, has been highly critical of US regulators’ policies regarding cryptocurrencies, highlighting the negative effects that could result.
Specifically, in a recent opinion piece, Armstrong explained that despite repeated calls from businesses for regulatory clarity on cryptocurrencies, authorities have instead opted for regulation based on enforcement of existing laws.
According to Armstrong, this stance taken toward cryptocurrencies is pushing innovation abroad, isolating the United States and jeopardizing its technological leadership in the development of financial systems that embody American identity and democratic values.
In fact, some countries, such as the United Kingdom, the United Arab Emirates, Brazil, Japan, the European Union, Australia, and Singapore, are currently drafting regulations to become cryptocurrency hubs and attract cryptocurrency firms.
However, according to Armstrong, China could be one of the main beneficiaries of this cryptocurrency-hostile policy:
“The Communist Party of China is promoting these powerful, rapidly scaling platforms around the world through its Belt and Road Initiatives, with its built-in social credit system. And with the recent launch of its digital yuan, China aims to directly challenge the US dollar and its role in global trade.”
In addition, Armstrong emphasized the importance of keeping the capital of cryptocurrency innovation in the United States through the passage of comprehensive and protective regulations designed to encourage adoption and development:
“The time has come for Congress to seize the historic opportunity presented by cryptocurrencies and pass comprehensive legislation that protects consumers and fosters innovation. Cryptocurrencies have the potential to play a significant role in promoting the American economy and democratic values around the world.”
Finally, Armstrong warned that if the situation continues as it is, future generations of Americans will pay the price of a repatriation of the cryptocurrency industry, similar to what happened with the semiconductor and infrastructure industries.
Source: https://en.cryptonomist.ch/2023/06/19/crypto-ripple-ceo-criticizes-sec/