Ripple Responds to U.S. Senate RFI on Crypto Market Structure Bill

Crypto firm Ripple is the latest to join a host of crypto stakeholders who have responded to the Senate Banking Committee’s Request For Information (RFI). The firm’s Chief Legal Officer (CLO), Stuart Alderoty, indicated that they were in a good position to contribute to the bill, considering their wealth of experience with regulators, including the SEC.

Ripple Responds To Senate’s Request For Information

In an X post, Alderoty shared the crypto firm’s response to the Senate Banking Committee’s RFI. He also thanked the Committee for the opportunity to respond to the RFI. The CLO remarked that his firm welcomes the chance to offer their unique perspective, given their over ten years of experience working with regulators globally and their hard-earned lessons from their SEC lawsuit.

As CoinGape earlier reported, the Senate Banking Committee had released the RFI following the release of the draft Crypto Market Structure Bill. The Request For Information asked questions regarding regulatory clarity and tailoring, investor protection, trading venues, market infrastructure, custody, illicit finance, banking, and innovation.

Ripple’s response was mainly to questions that focused on regulatory clarity. First was the question of whether the bill struck the right balance in allocating jurisdiction over digital assets between the SEC and CFTC.

The crypto firm remarked that the draft creates more ambiguity rather than clarity for the industry in its attempt to distinguish the SEC and CFTC’s authority over digital assets. In line with this, they asked for additional revisions to refine jurisdictional boundaries and achieve a balanced oversight framework.

On Whether Or Not The Concept Of Ancillary Assets Should Apply To Crypto

Ripple opined that the Crypto Market Structure Bill shouldn’t rely on the concept of ancillary assets, as it could bring about regulatory overreach in some situations. The firm noted that there is no assurance that a different SEC leadership will faithfully apply this concept in a consistent and principled manner.

The RFI response noted that the concept of ancillary assets could subject major tokens that are operating on open and permissionless networks, including ETH, SOL, and XRP, to perpetual SEC oversight. This could happen even when transactions have no features of a securities offering.

Therefore, Ripple proposed that the draft bill should align with the CLARITY Act’s approach to digital asset classification to avoid regulatory fragmentation and market uncertainty. They also asked that the proposed legislation should take into account the decentralized nature of mature networks that no person or group of persons controls.

In answering the question of whether existing tokens should come under a new token classification framework, the firm stated that tokens that have existed for five or more years on permissionless, open networks should be presumptively excluded from securities regulation.

Avoiding Another Regulation By Enforcement Approach In The Future

Possibly due to its XRP lawsuit against the SEC, Ripple is very apprehensive about the bill creating open-ended provisions that allow the Commission to bend the rules in its favor. For instance, regarding whether the Howey Test should apply to digital assets, the firm urged Congress to codify it, if it intends to do so, in a way that prevents misuse or manipulation by the SEC.

Alderoty and his firm are likely skeptical about future administrations, and not necessarily this current administration. The Ripple CLO had even commended the SEC Chair, Paul Atkins, for the regulatory shift under his tenure.

Meanwhile, regarding whether federal legislation should preempt certain state laws, the crypto firm opined that preemption is especially critical in areas like market structure, stablecoin issuance, custody standards, and token classification.