Last week, a House Financial Services Subcommittee held an oversight hearing focused on the Securities and Exchange Commission's (SEC) enforcement division. Despite the norm that ongoing enforcement cases are not discussed at these hearings, Subcommittee Chairman Representative Brad Sherman (D-CA) took it upon himself to put his thumb on the scale of the largest enforcement case in crypto: SEC vs. Ripple. Rep. Sherman's off-base remarks underscore the urgent need for sensible crypto legislation from Washington.
The case against Ripple, a U.S.-based crypto solutions company, has emerged as the bellwether to get clarity on how to classify and regulate digital assets in the U.S. A brief recap: in 2020, the SEC filed a misguided lawsuit against Ripple, its chairman, and CEO, alleging that XRP was a security. Ripple uses XRP (a cryptocurrency that exists on an open, permissionless, decentralized blockchain ledger) in its product offering to facilitate faster, cheaper, and more transparent cross-border payments.