GiD Report#192 — The SEC v. Ripple, a year later (also, Jack v. Marc)

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GlobaliD

6 min readDec 28, 2021

Welcome to The GiD Report, a weekly newsletter that covers GlobaliD team and partner news, market perspectives, and industry analysis. Check out last week’s report here.

Happy holidays! See you all in the new year.

This week:

The SEC v. Ripple, a year later
Tweet of the week — the web3 wars
Tweet of the week — web3 incentives
Chart of the week — the other flippening
Chart of the week — welcome to the metaverse
This week in Big Tech
Stuff happens

1. The SEC v. Ripple, a year later

About a year ago, the SEC dropped its infamous lawsuit on Ripple just before Christmas and on then SEC Chief Jay Clayton’s last day in office.

You can check out /gregkidd’s immediate reactions to the lawsuit here — in our first (impromptu) recording of the podcast on Christmas Eve.

Since then, we’ve seen former MIT professor, CFTC commissioner, and Goldman Sachs alum Gary Gensler take Clayton’s place at the helm of the SEC, but not much has changed.

Rosalyn Clayton, who’s done a terrific job covering the lawsuit over the last year, reported on Gensler and Clayton earlier this month:

Last Wednesday, the current and previous chairmen of the Securities and Exchange Commission (SEC) shared what was billed as a “fireside chat” to open the Digital Asset Compliance & Marketing Summit. Gary Gensler and Jay Clayton spoke, took no questions, and agreed that the multi-trillion dollar crypto innovation space is a dark, menacing threat that legitimate crypto entrepreneurs must follow opaque rules or face crippling SEC lawsuits. Gensler made it clear that there is no difference between “fraudsters” and “good-faith actors” in crypto — both are lawbreakers endangering the public.
Many in the audience of crypto industry leaders, just maligned as crooks, were stunned. Gensler repeatedly said that “platforms need to come in and get registered,” as if everyone knew what he was talking about. Perianne Boring, the head of the Digital Chamber of Commerce tweeted, “People in the room are looking around and asking, “register as what?””
It’s a fair question given that the exchange Coinbase — the only crypto company to have gone public on the stock market — tried “going in”. Upon sharing to share its lending platform information, the SEC slapped Coinbase with a subpoena and the threat of what Gensler affectionately calls “the enforcement tool.”

And so a year later, the U.S. continues to find itself in murky waters when it comes to regulatory clarity and crypto innovation.

Jay Clayton’s crypto op-ed: Opinion | America’s Future Depends on the Blockchain
Ripple CEO Brad Garlinghouse’s response: Opinion | Great Potential, Great Obstacles for Blockchain

Some startups such as Open Props have tried to navigate the existing regulatory landscape in earnest — and failed. Here’s Zachary Fallon’s take on Reg A (via /gregkidd):

It pains me to say it, but Open Props’ recent announcement of the coming termination of its ongoing Regulation A (“Reg A”) digital asset securities (Props) offering and the cessation of support for its Props Loyalty Program leads me to one stark conclusion:
While compliant, Reg A is neither a business nor investor friendly or workable regulatory path for cryptocurrency-related companies that intend to offer and sell investment contracts on an ongoing basis.

Jane Street Capital alum Sam Bankman-Fried is one of the rising stars in crypto. His company, FTX, is domiciled in the Bahamas and doesn’t serve U.S. customers. (FTX.US is a separate entity.)

As a resident of the so-called financial capital of the world — I’m unable to access most centralized products including Uphold, Crypto.com (the new name of LA’s Staples Center), BlockFi, and FTX.US — just to name a few — thanks to BitLicense, New York’s stringent regulatory regime. (It also meant that I wouldn’t be able to partake in living legend Steph Curry’s NFT drop last week since FTX.US was a requirement as part of the minting and verification process.)

That’s certainly an opportunity for states like Wyoming and Florida. But it’s also just a bit of a mess.

But for the U.S., that’s the state of play when it comes to crypto regulation.

Relevant: