A former executive of the Securities and Exchange Commission (SEC), Joseph Hall, has said that “there is a good chance” of the financial regulator lossing its case against crypto payment company, Ripple.
Hall, who once served as Managing Executive for Policy under Chairman William H. Donaldson between 2003 and 2005, believes that the attempt by the SEC to enforce actions against Ripple is proof of why the crypto industry needs more regulatory clarity.
According to him, the commission’s Howey test cannot properly determine if a digital asset is a security or not. In his words, he noted that the test does not properly explain what a security is and he made an analogy where he stated that “imagine trying to explain what an iPhone is in language your great-grandfather would have understood just after World War II. That’s how easy it is to predict which digital assets are securities under the postwar Howey test.”
This apparent lack of clarity affects the development of the blockchain and crypto industry in the United States, he added. He further highlighted the fact that investors are unwilling to risk investing in a space where they cannot be guaranteed of the backing of the law.
Hall’s view on Ripple Vs SEC
Joseph Hall stated that Ripple could get the same treatment Ethereum got in 2018 when William Hinman made a speech at the Yahoo Finance All Markets Summit that the second-largest crypto asset “might have been born a security but later morphed into a nonsecurity.”
Hall pointed to the fact that this could also be applied to Ripple’s token saying that “maybe there were some issues with early sales of XRP” but presently, he believes the asset is currently “in the clear.” He also noted that the litigation could result in “heavy losses for investors” because of the current huge market of the asset.
He concluded by saying that any judge looking to try this case might ask the SEC why it is just complaining about the XRP sales now since the token had been in sales since 2012.