Court case with precedent character
The allegation of a securities law violation has led to a court case that the crypto industry is watching with bated breath – after all, it has enormous potential to serve as a model for future regulatory policy. The SEC is accusing Ripple of violating securities law; if the SEC wins, a flood of lawsuits threatens numerous crypto projects, including ETH.
Currently, it looks like Ripple is gaining the upper hand. Smaller interim successes and the impression that the SEC is not fighting with all its might give cause for hope – hope for the entire crypto market, which has been staggering along for almost a year and urgently needs a new start after the ETH merge only provided a short-term boost. The Ripple price has already picked up on the aforementioned hope and has risen significantly in recent weeks, bucking the general trends.
Crypto high thanks to regulation?
Regardless of the background to the SEC’s lawsuit against Ripple, one has to admit that without government regulation, the crypto market will tread water sooner or later. Large institutional investors in particular are reluctant to invest without legal regulation, but it is precisely they who, through pension or investment funds, provide access to large segments of the population that have little or no knowledge of cryptos to date.
If the SEC does not succeed in classifying Ripple as a security, the authority will suddenly lack the legal basis for further lawsuits – a blessing for everyone: crypto projects as well as investors who want a bit more security. And it would be an enrichment of the market, which would be enriched by a multitude of investment opportunities, since currently only Bitcoin comes into question as a serious crypto investment for companies or institutions.
Image problem of the crypto sector
The lack of regulation or the credo of a self-regulating market (which had already led to an economic fiasco under George W. Bush) is also the reason why a solution urgently needs to be created to make trading possible within a reasonable framework and to be safe from abuse, fraud and other dangers.
The image problem is also the reason why legislators and their authorities are taking an aggressive stance in creating new regulations and pursuing existing laws. The latter is further complicated by the fact that in many areas there is no legal framework that takes into account current market realities (which again leads to the image problem…).
Critical factor: time
“The mills of the law grind slowly” is probably the most apt phrase to describe the problem: Not only has the SEC vs. Ripple court case been dragging on for years, but the creation of new laws also takes a long time – too long, if you take the rapidly developing markets into account: The ban on algorithmic stablecoins being discussed in the US Senate, which is the cause of the Terra collapse in May, takes years to enact. Just studying how algorithmic stablecoins work consumes much of the time needed. There is simply a lack of appropriate expertise in the responsible bodies to enable faster, more timely implementations.
Bright spots:
If there is a lack of crypto professionals on boards, there is certainly no lack of economically minded people in the US: A White House fact sheet presented in mid-September on a holistic view of the crypto sector supports “responsible innovation” alongside a more restrictive stance. In the face of the rapidly changing geopolitical and global economic situation, the US is literally forced to promote innovation and regulate less in order to maintain its competitiveness in the medium term.