Ripple said Monday that the SEC is planning to file a lawsuit against the company on claims that it sold unregistered securities. And while the initial reaction of many crypto enthusiasts was to side with the US regulator, the tide has begun to change.
The most notabe about-face came from Messari CEO Ryan Selkis, who yesterday said, “In before Ripple PR’s ‘we’re in this together’ nonesense. No. We’re not.” But today Messari’s Unqualified Opinions newsletter included an analysis on why Selkis hopes Ripple wins.
Ripple is Not the Enemy
In general, the change in sentiment from Selkis and others seen in crypto Twitter can be summarized like this: Ripple may or may not be a good digital settlement layer, but that doesn’t mean it should be regulated away.
Crypto enthusiasts are suspicious of Ripple because it’s run on a permissioned network, and token supply isn’t determined by miners or validators. Instead, 100B XRP was issued all at once, with a chunk of it held in a reserve to be sold in scheduled installments. On top of this more centralized system, there’s the “XRP Army” which is known to flood the mentions of anyone who dares criticize the token.
So at first, XRP critics felt vindicated.
Clear Path Needed
But then, it started to become clear that if there was a “bad guy” in the story, it was more likely to be regulators trying to clamp down on an emerging industry. Rather than focus on calling XRP a security, which doesn’t help anyone, regulators should provide better ways for investors to trade, hold and use digital assets.
If they don’t, investors will be forced to pay the exorbitant premiums of Grayscale’s products, while DeFi innovators go to Europe and Asia, and sketchy exchanges continue concentrating much of the trading volume.
Cryptocurrencies aren’t going anywhere. Regulators should accept that and provide clarity for teams who will keep on building, and investors who will find a way to buy them anyway.