A key House lawmaker says he’s optimistic that a recent court ruling widely seen as limiting the US Securities and Exchange Commission’s power will bolster support for crypto legislation that he’s been championing.
Glenn Thompson, a Pennsylvania Republican who chairs the House Agriculture Committee, said Tuesday that he plans to formally introduce the bill this week with House Financial Services Committee Chairman Patrick McHenry, a North Carolina Republican. A federal judge ruled last week that sales of Ripple Labs Inc.’s XRP token were securities — and under the SEC’s remit — when made directly to institutional investors pursuant to written contracts, but not when offered to the general public on exchanges.
“The Ripple decision has highlighted what we’ve been saying all along — there’s confusion about how digital assets are treated under the securities laws, and it’s up to Congress to step in and provide both certainty and clarity,” Thompson told reporters. He said he hopes the ruling will encourage Democrats to support the plan and even co-sponsor the bill.
The legislation, which the lawmakers previewed in June and hope to advance through their committees next week, would clarify when crypto assets are regulated as securities or commodities. It would also give the Commodity Futures Trading Commission authority to oversee certain tokens.
The Ripple decision was widely seen as a blow to the SEC because the agency has said that most tokens offered to retail investors are really unregistered securities. On Monday, SEC Chair Gary Gensler said he was disappointed with parts of the decision, but that his agency would continue to push crypto firms to comply with its rules.
Several Democrats have backed the SEC’s stance that existing securities rules are clear and cover crypto assets. It remains to be seen if the Ripple decision will change that view.
However, a few Democrats have been critical of the agency’s approach. Ritchie Torres, a member of the House Financial Services Committee who represents a district in New York, sent a letter to the Gensler Tuesday asking if the SEC would reassess following the Ripple decision.
“The SEC has chosen to communicate and regulate not by clear rule or guidance but by enforcement actions, often politically timed,” Torres said in the letter. “The endless stream of contradiction and confusion, as well as the arbitrariness of the enforcement actions themselves, is the opposite of fair notice.” The SEC didn’t immediately respond to a request for comment.
Thompson said the timing of the Ripple ruling was “really helpful” because it illustrated the need for clearer guidelines so that consumers are protected. “Maybe that’ll help persuade some folks in the end,” he added.
(Adds letter from Congressman Ritchie Torres beginning in seventh paragraph.)
