Ripple’s chief legal officer, Stuart Alderoty, recently exposed the SEC’s hidden war on crypto, which has slowed down the industry’s progress over time. Alderoty now leads among industry insiders who hope the next chairman of the US Securities and Exchange Commission will overturn the war and reset a new policy framework for the cryptocurrency sector.
According to a recent post on X by Ripple’s chief legal officer, Alderoty stated he was deeply concerned by what appeared to be deliberate moves by the SEC to short-circuit the cryptocurrency industry; in particular, Alderoty called out that “Operation Chokepoint 2.0,” calling it a coordinated effort by the regulatory bodies to especially restrict businesses and banking services from relating with the crypto industry.
Crypto Industry Leaders Want To See a Change of Regulatory Attitude
In particular, Alderoty explained that the SEC’s hidden war on crypto took a steep curve beginning in 2012. He revealed that leading regulatory agencies like the Federal Reserve (Fed), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency specifically pressured banks to stop serving players within the crypto industry.
Observing that the crypto industry would easily become the primary focus of similar strategies, Ripple’s chief legal officer compared the moves by regulators as a tool they use to frustrate industries they deemed undesirable.
As the new Trump administration prepares to come into office in January 2021, Alderoty and other crypto industry leaders want to see a change of attitude with the appointment of an SEC leadership that would encourage innovation within the crypto space. The reason is that the SEC’s hidden war on crypto was made worse by conflicting views among the regulatory agencies.
For example, the SEC and CFTC have always taken conflicting stands on how to classify digital assets, thereby enhancing regulatory uncertainty. Ripple’s chief legal officer would like to see the creation of an act that will foster collaboration in addition to creating a unifying regulatory framework.
Swapping CFTC for SEC
As speculation remains high on whether the SEC’s hidden war on crypto will end with the arrival of the new administration, there is already talk that the Trump 2.0 administration would consider mandating the Commodity Futures Trading Commission’s (CFTC) to regulate and oversee the cryptocurrency market.
Pundits believe that such a move would place the CFTC as a regulator for digital assets and take BTC and ETH away from the SEC’s dominance, which most crypto enthusiasts believe has been choking. If the plan succeeds, the CFTC will classify digital assets as commodities, and a lighter regulatory approach will follow, potentially encouraging innovation in the crypto space.
Could the CFTC end SEC’s Hidden War on Crypto?
At the moment, many players within the crypto industry see the CFTC as the more business-friendly entity, even though they remain concerned about whether its small budget compared to that of the SEC would enable it to handle expanded responsibilities if it took over crypto regulation.
However, there is fear among the traditional CFTC constituencies about what additional responsibilities would mean to the regulator. Ripple’s chief legal officer and other industry players believe it is necessary to address such concerns.
Alderoty opines that one of the ways to deescalate the SEC’s hidden war on crypto would be to halt the numerous lawsuits against digital asset companies that are not fraud-related. If this were to take place, it would technically bring to an end the lengthy SEC vs. Ripple lawsuit that started way back in 2020.
While Ripple was already handed a $125 million fine after the federal court ruled institutional XRP sales violated securities laws, the SEC stated it was disappointed with the ruling and has since made intentions to appeal the ruling.
Conclusion
As the crypto-friendly Trump 2.0 administration prepares to take office in January 2025, Ripple’s chief legal officer, Alderoty, is calling on the SEC to work alongside Congress to create a unified cryptocurrency regulatory framework to promote the industry.
Alderoty opines that the SEC should rethink its role, stop its assumption of jurisdiction over the crypto space, take up a more collaborative stance, and create a more crypto-friendly framework. The current stance under Gary Gensler has been specifically blamed for escalating the SEC’s hidden war on crypto, something Alderoty and others want to come to an end.
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