CFTC commissioner visits Ripple offices as supremacy battle with SEC heats up

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As Ripple continues to battle it out with the U.S. Securities and Exchange Commission (SEC) in court, it recently welcomed an unlikely visitor in Caroline Pham, a Commodity Futures Trading Commission (CFTC) commissioner who took shots at the SEC’s “regulation by enforcement” earlier this year.

Describing it as part of her learning tour, Pham took to Twitter to reveal that she had visited Ripple’s offices in San Francisco.

The next stop on my learning tour was visiting @Ripple Labs. Thanks @bgarlinghouse! #XRP #crypto #blockchain pic.twitter.com/ICr8H2ZE3q

— Caroline D. Pham (@CarolineDPham) September 19, 2022

The commissioner was received by the top brass at the blockchain payments company, with CEO Brad Garlinghouse stating that “it was an absolute pleasure to welcome [Pham] to our offices.”

The visit comes just days after Ripple and the SEC filed motions calling for a summary judgment, with both noting that the battle had gone on for long enough. In their motions, both factions held onto their long-held convictions, with Ripple insisting that XRP isn’t a security and that profits to XRP holders came purely from market forces of supply and demand, not the actions of the company. 

The SEC claimed that XRP sales constituted an investment contract, with XRP holders depending on the actions of the company to make money, falling squarely under the stipulations of the Howey test.

A summary judgment is filed when any party involved in a legal battle believes that a judge has enough facts to make a ruling on a case without having to take it to trial.

CEO Garlinghouse attacked the SEC following the filing of its summary judgment, claiming that Gary Gensler was seeking to expand the jurisdiction of the agency far beyond the mandate conferred by Congress.

Today's filings make it clear the SEC isn’t interested in applying the law. They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress. https://t.co/ooPPle3QjI

— Brad Garlinghouse (@bgarlinghouse) September 17, 2022

SEC and CFTC clash over who should regulate Bitcoin

Commissioner Pham’s visit is the latest show of the division between the two top regulatory agencies regarding digital assets. Both are led by a belief that they have the right to be the major regulators of the industry and have been fighting for the approval of Congress.

It all stems from their definition of digital assets—the SEC believes that they (with the exception of BTC) are securities, while the CFTC believes that they are commodities. 

This division has played out in the open in recent years. In July, Pham attacked the SEC’s “regulation by enforcement” and its claim that most tokens are securities. 

“The SEC’s allegations could have broad implications beyond this single case, underscoring how critical and urgent it is that regulators work together…Regulatory clarity comes from being out in the open, not in the dark,” she stated.

Read my statement on #SEC v. Wahi, regulation by enforcement & #CFTC authority #crypto #digitalassets #DAO pic.twitter.com/xbHvyshx8l

— Caroline D. Pham (@CarolineDPham) July 21, 2022

Rostin Benham, the head of the CFTC, has spearheaded the agency’s push to become Bitcoin’s watchdog. Reports indicate that he has already directed his staff to prepare to be the industry’s major regulator.

Benham is counting on the support of the Senate Agricultural Committee, which is set to push a bill that would give his agency more power over digital assets. 

“The CFTC’s expertise and experience make it the right regulator for the digital asset commodity market,” Benham stated.

The SEC is just as intent on being the digital assets regulator, if not more so. Chairman Gary Gensler has already made waves with his tough talk on digital assets, insisting that most tokens are securities and are under his purview. 

Last week, Gensler told the Senate Committee on Banking, Housing, and Urban Affairs that he believes the SEC is well equipped to oversee digital assets. He admitted that there’s room for improvement, saying, “As markets have evolved, our rules have to evolve as well.”

However, while he now wants the rules to evolve, just two weeks ago, he claimed that current regulations are sufficient for digital assets.

“Nothing about the crypto markets is incompatible with the securities laws. Investor protection is just as relevant, regardless of underlying technologies,” he said in his speech on September 8 at an event organized by the Practicing Law Institute.

For those that say the SEC hasn’t issued enough guidance, Gensler reiterated that “for the past five years, though, the commission has spoken with a pretty clear voice here.”

“Not liking the message isn’t the same thing as not receiving it,” he added.

Watch: The BSV Global Blockchain Convention panel, ESG Compliance & Blockchain