In a recent interview with Thinking Crypto, Bill Hughes, Senior Advisor and Director of Global Regulatory Affairs at ConsenSys, talked about Ethereum, how it was previously viewed differently, and how it is now viewed by the SEC. I opened up about how I was thinking and how I was confused. He is concerned that there is talk of a subpoena to the Ethereum Foundation and that it could change the landscape for Ethereum users and the market. What's happening with Ripple?
The interviewer mentioned the Ripple incident and the impact of the SEC ruling on Ripple XRP. Although litigation is ongoing, an important ruling has been made that XRP is not inherently a security. However, their classification depends on how they are processed and distributed, such as through contracts.
Ethereum, Ripple, and the SEC: Understanding the Future of Cryptocurrency Law
For example, the judge distinguished between secondary market sales, which involve contracts and discussions with Ripple, and sales to institutional investors. This raises the question of how similar regulatory issues could impact Ethereum, despite its different structure. How might this precedent affect Ethereum's stance toward the SEC?
Bill Hughes explained how Ripple differs from other cases, such as those of Coinbase and Terraform Labs. In Ripple, the court focused on the Howie test, which evaluates individual transactions and contracts to determine whether they qualify as securities. However, in other cases, courts have looked beyond specific transactions or contracts to broader schemes.
This poses a challenge because the SEC can define schemes broadly and potentially encompass a variety of activities, such as securities trading. Crypto industry participants argue that the statute of limitations is necessary to prevent the SEC from indiscriminately classifying crypto activity as securities trading.
He worried that without such restrictions, almost everything in the cryptocurrency space could be classified as securities, giving the SEC too much power. He calls for clearer legislation to provide consistent policies for regulating cryptocurrencies, rather than leaving the industry in uncertainty. Hughes raises the question of what will happen first: meaningful legislative action or continued ambiguity in crypto regulation.
