Ripple CEO Garlinghouse Dismayed by Clayton’s Contradictory Statements
During an interview, Clayton highlighted the challenges faced by entrepreneurs and investors in the cryptocurrency space, making comments that seemed to contradict his previous regulatory stance. Clayton stated:
I have a great deal of sympathy for entrepreneurs, those reaching out to the public to raise capital, and I have a great deal of sympathy for retail investors wanting these opportunities.
Considering the lawsuit filed against Ripple in December 2020, these statements mark a significant departure from the actions of his tenure as SEC Chairman.
Most of what you saw in the ICO craze, from crypto folks, is a big disappointment. Regulators should facilitate capital raising for small and medium-sized companies and ease participation in these opportunities for non-accredited and even accredited investors.
Clayton’s views on the regulatory environment for cryptocurrencies further increased the bewilderment. Advocating that the technology behind cryptocurrencies should guide regulatory treatment, he argued:
I believe the right way to regulate crypto is to recognize that it’s a technology, not a product. It is a different technology in almost all cases and sometimes presents a known product more efficiently.
Discussing the classification of cryptocurrencies, Clayton drew attention to the ongoing debate on whether they should be treated as securities or commodities:
I think the market can decide that. I think it’s ethical enough in trade, but in terms of regulating crypto, it’s a technology issue, whether a product is a security or a commodity.
Crypto Classification “Quite Easy,” Says Clayton
This perspective from Clayton contrasts with his aggressive stance during his SEC chairmanship, particularly when accusing Ripple of selling XRP in unregistered transactions.
Clayton further added:
I think these decisions are quite easy to the extent that we grapple with these classification issues. I say, go ahead, let’s have regulated platforms where you can place both until these classification issues are resolved.
Ripple CEO Garlinghouse responded to Clayton’s comments, echoing the general atmosphere of distrust in the XRP community. He expressed his reaction with disbelief, summarizing the irony and disappointment felt by many who closely follow the SEC’s actions in the crypto space, especially against Ripple and XRP.
The lawsuit initiated by Clayton against Ripple just before his departure from the SEC had a significant impact on XRP, causing a major sell-off. This action, its timing, and the perceived conflict of interest were criticized, raising questions about the ethics behind such regulatory decisions.
The XRP community, in particular, raised their voices in accusations of hypocrisy against Clayton, condemning his actions while suing Ripple and later seemingly advocating for a more understanding and technology-focused approach to regulation.