Chris Larsen, the co-founder and executive chairman of crypto exchange Ripple, has criticized federal agencies' actions against crypto companies, stating that they are driving innovators out of the United States and into other countries. Larsen's comments come after the U.S. Securities and Exchange Commission (SEC) dropped a lawsuit against him and Ripple CEO Brad Garlinghouse. A judge ruled that Ripple's sale of the token XRP to the public did not constitute securities offerings.
Garlinghouse said in September that due to the lack of regulatory clarity for digital asset companies in the U.S., Ripple would do 80% of its hiring in other countries moving forward. Garlinghouse highlighted jurisdictions including Singapore, Hong Kong, the UK, and Dubai as examples of regions where governments are partnering with crypto industry participants, leading to “clear rules” and “growth,” CoinDesk reported.
Garlinghouse said in a portion of the interview shared on X by Bloomberg that he doesn't think the door is "permanently shut" for the U.S. to be a global leader in the crypto industry, but he said, "It's definitely a tough spot." He noted that the U.S. "is still the largest economy in the world" and said that a potential change in the administration could benefit the crypto industry. He highlighted the fact that the "SEC continues to lose in court" and emphasized that a panel of judges in another case recently labeled the SEC's actions "arbitrary and capricious."
Members of Congress have also criticized the SEC's approach to crypto regulation. Sen. Cynthia Lummis expressed concerns about the SEC's failure to provide a clear regulatory framework for digital asset exchanges and its reliance on "regulation by enforcement." Lummis argued that this approach harms consumers and pushes the industry offshore.
In addition to Ripple, several other digital asset companies have faced enforcement actions from the SEC, including Linus Financial, Impact Theory, Celsius, Coinbase, Binance, Bittrex, Nexo Capital, Genesis, and Gemini.
Lawmakers in the U.S. have introduced various bills aimed at regulating the crypto industry. These bills cover areas such as stablecoins, anti-money laundering, self-custody protections, and market structure. There is also ongoing debate about whether digital assets should fall under the authority of the SEC or the Commodity Futures Trading Commission (CFTC).
A June report from Moody's Investors Service warned that failure to advance comprehensive crypto regulations "could make the United States (Aaa stable) comparatively less attractive for both firms and investors, particularly in a context where many other jurisdictions are moving forward with comprehensive rules."
The concerns raised by Larsen and Garlinghouse highlight the need for regulatory clarity and a supportive environment for the crypto industry in the U.S. to prevent the loss of innovation and job opportunities to other countries.
