Ripple Seeks Clarity in Crypto Regulation Proposal for Senate

Ripple Labs Provides Feedback on Proposed Crypto Regulation Bill

Ripple Labs, a leading company in the cryptocurrency space, has officially submitted its feedback to the U.S. Senate Banking Committee regarding a proposed bill aimed at regulating the crypto industry. The company is advocating for greater clarity and defined roles for regulatory agencies involved in overseeing digital assets.

This response comes as part of a broader Request For Information (RFI) issued by the Committee following the introduction of the Crypto Market Structure Bill. This draft legislation seeks to bring structure and order to the rapidly evolving digital asset market.

Stuart Alderoty, Ripple’s Chief Legal Officer, shared the news through a post on X (formerly Twitter). He expressed appreciation for the opportunity to contribute to the discussion and highlighted the company's extensive experience working with global regulators. Ripple's legal battles, especially with the U.S. Securities and Exchange Commission (SEC), have provided valuable insights into the challenges faced by the industry.

Alderoty emphasized that the company welcomes the chance to share its unique perspective. With over a decade of engagement with regulators worldwide, Ripple believes it has a deep understanding of the issues at hand. The company's submission focused on the need for clear regulatory guidelines, particularly concerning the roles of the SEC and the Commodity Futures Trading Commission (CFTC) in crypto oversight.

Concerns About Jurisdictional Ambiguity

Ripple has raised concerns about the lack of clarity in the proposed bill regarding the responsibilities of the SEC and CFTC. The company argues that the current language is vague and could lead to overlapping regulations, creating confusion for businesses and investors. Without clear boundaries between the two agencies, the crypto industry may continue to face the same legal uncertainties that have hindered growth in the United States.

The blockchain company suggests that the bill should adopt language from the CLARITY Act, which provides structured guidelines for determining whether digital assets are securities or commodities. Ripple also recommends that tokens operating on permissionless, open-source networks for more than five years should be automatically excluded from being regulated as securities to reduce legal uncertainty.

Warnings Against Regulatory Overreach

In addition to calling for clearer definitions, Ripple warns that the proposed bill leaves too much room for future SEC leadership to interpret rules in ways that could harm the industry. The company references its ongoing legal battle with the SEC over whether XRP is classified as a security. Although a judge ruled partially in Ripple’s favor last year, the firm remains cautious about "regulation by enforcement," where rules are shaped through lawsuits rather than legislation.

To prevent this from happening again, Ripple encourages Congress to formally define key legal tests, such as the Howey Test, which the SEC uses to determine if something qualifies as a security. If lawmakers intend for the Howey Test to apply to crypto, they should codify it carefully to ensure it does not stretch to cover decentralized assets that do not fit the traditional definition of securities.

State vs. Federal Regulation

Ripple also highlights the importance of federal law taking precedence over state regulations, especially in areas such as market structure, stablecoin issuance, token classification, and custody standards. The company believes that a unified national framework would foster innovation and encourage investment in U.S.-based crypto projects.

By addressing these critical issues, Ripple aims to contribute to a more stable and predictable regulatory environment for the cryptocurrency industry. The company continues to advocate for policies that support growth while ensuring investor protection and market integrity.