The U.S. Senate Banking Committee will hold a full hearing on proposed crypto market structure legislation next Wednesday, July 9, at 10 a.m. ET. This development comes just weeks after Republican Senators Tim Scott, Cynthia Lummis, Bill Hagerty, and Thom Tillis introduced the bill. The legislation aims to clarify which digital assets constitute securities and which qualify as commodities, thereby defining the responsibilities of the SEC and CFTC accordingly. Ripple CEO Brad Garlinghouse will testify at the hearing.
Other prominent witnesses include Blockchain Association’s Summer Mersinger, Chainalysis CEO Jonathan Levin, and Paradigm’s Dan Robinson. Eleanor Terrett of Crypto in America confirmed the lineup, highlighting the growing importance of regulatory clarity in the crypto space.
Ripple’s Regulatory Journey Adds Context
Attorney John Deaton emphasized that Ripple’s long battle with regulatory agencies makes Garlinghouse’s inclusion relevant. According to Deaton, Ripple’s leadership engaged with U.S. regulators from the outset. In 2013, Ripple Chairman Chris Larsen met with the SEC, Federal Reserve, and U.S. Treasury to explain XRP and its blockchain, the XRP Ledger (XRPL). A year later, the GAO labeled XRP a virtual currency.
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In 2015, Ripple settled with FinCEN over regulatory violations, agreeing to comply with banking laws and paying a $700 million fine. Notably, the SEC had access to Ripple’s internal data through a shared arrangement with FinCEN.
SEC Actions Raise More Questions
Despite its early cooperation, Ripple continued to face uncertainty. In June 2018, SEC lawyers conducted an internal Howey test on XRP but recommended no enforcement. Later that year, Garlinghouse met SEC officials again. Despite the infamous Hinman speech, which granted Bitcoin and Ethereum regulatory leniency, the SEC did not warn Ripple about any violations.
In 2019, the FSOC released a report, co-signed by leaders of the SEC and CFTC, classifying XRP as a virtual currency. That same year, Coinbase notified the SEC before listing XRP. The agency did not object, and Coinbase proceeded with the listing, promoting XRP for cross-border transactions.
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Additionally, in 2019, MoneyGram informed the SEC that it would utilise XRP for remittances and sell it on secondary markets. The SEC raised no objections, despite being fully aware of the transactions.
Global Clarity vs. U.S. Confusion
XRP currently trades on over 200 global crypto exchanges, with several countries officially classifying it as a non-security. However, in December 2020, the SEC sued Ripple, alleging all XRP sales since 2013 were unregistered securities offerings.
Deaton argues that Ripple’s treatment exposes the inconsistent U.S. regulatory approach. Despite years of engagement with multiple agencies, the SEC maintained its lawsuit. As Garlinghouse prepares to testify, the crypto industry hopes his appearance will push lawmakers to deliver long-overdue regulatory clarity.
