According to Ripple crypto exchange, the US Securities and Exchange Commission (SEC) should no longer take an enforcement-first method but establish decisive regulatory frameworks for the cryptocurrency industry.
Ripple believes that the SEC’s enforcement history has produced confusion since it applied ambiguous legal rules.
Ripple challenges SEC’s regulatory strategy
Ripple responded to a February 21, 2025, SEC statement titled “There must be some way out of here,” arguing that the agency needs to prioritize legal clarity. The company referenced a Bob Dylan lyric, asserting that the SEC’s past strategies led to confusion within the industry. Ripple maintains that previous enforcement measures contradicted the Crypto Task Force’s mission to create transparent standards for identifying securities and investment contracts.
Stuart Alderoty, Ripple’s chief legal officer, has accused the SEC of deliberately fostering ambiguity to mask regulatory shortcomings. The exchange has now called the commission to adopt a clearer regulatory framework. In its official response, Ripple stated that the SEC should operate within existing legal statutes and offer direct market guidance, which has been lacking.
Ripple challenges SEC’s jurisdiction over digital assets
Ripple has demanded clarification of the SEC authority over digital assets by asserting the commission regulates only traditional securities and their transactions within the Securities Act framework. According to the crypto firm most digital assets do not meet the category of security defined by the SEC.
Ripple requests clarification about yield production and staking on public networks from regulators because it considers these methods to differ from standard securities notions. Ripple expressed its endorsement of regulatory safety zones and protective frameworks because they have proven effective in regulatory environments throughout the UK and Switzerland and Singapore. Ripple supports blockchain innovation through these regulatory methods after asserting that digital assets should not be labeled as securities too early.
Ripple criticizes SEC’s use of the Howey test
Ripple has accused the SEC of misapplying the Howey Test, determining whether a transaction qualifies as an investment contract. The company argues that the commission has used the test improperly to classify digital assets as securities, even in cases where no binding agreements or profit-sharing arrangements exist.
Ripple argues that such requirements impede the ability of blockchain startups to open their operations and grow inside American territories. The company backs up the SEC’s decision to label meme coins as non-securities yet argues for rules to respect established legal structures instead of unregulated definitions that might destabilize the marketplace.