Brad Garlinghouse, the CEO of Ripple, has once again expressed his dissatisfaction with the regulatory approach of Gary Gensler, the Chairman of the United States Securities and Exchange Commission (SEC), towards the cryptocurrency industry. In a recent interview at the World Economic Forum in Davos, Switzerland, Garlinghouse criticized Gensler’s focus on hiring more lawyers for enforcement actions rather than establishing clear regulatory guidelines.
Garlinghouse calls Gensler a political liability
Garlinghouse reiterated his concerns about Gensler’s approach, which he referred to as “regulation through enforcement.” He argued that the SEC has been prioritizing legal action against crypto-related companies, leading to numerous lawsuits in recent years. This approach, according to Garlinghouse, is detrimental to the growth and development of the cryptocurrency industry in the United States.
Crypto firms eager to follow regulatory framework
Garlinghouse emphasized that most crypto-related firms in the United States are willing to comply with regulatory requirements if clear and well-defined rules are established. He noted that countries worldwide have already taken steps to regulate their cryptocurrency markets, citing the European Union’s adoption of comprehensive rules for crypto regulation as an example.
Under these new rules, firms seeking to issue, safeguard, and trade tokenized assets, cryptocurrencies, and stablecoins in the 27 European nations must obtain a license. Garlinghouse pointed out that while other regions are making progress in crypto regulation, the United States has lagged behind in this regard.
Leveraging AI for regulatory clarity
In the absence of regulatory clarity from the SEC, Garlinghouse proposed a novel solution. He suggested that the United States should leverage artificial intelligence, specifically the popular AI chatbot ChatGPT, to gather insights and recommendations on how to regulate the crypto space effectively.
Garlinghouse stated, “I jokingly suggested that maybe what we should just do is type into ChatGPT ‘How should the U.S. regulate crypto?’ It is more than what the U.S. SEC has done.” This proposal highlights his frustration with the current regulatory landscape and the lack of proactive measures taken by the SEC.
SEC faces pushback from the judicial system
The Ripple CEO also pointed out that the SEC has faced resistance from the judicial system for overstepping its authority in legal matters related to cryptocurrencies. He cited the SEC’s losses in cases against Ripple and Grayscale as examples of the agency’s struggle to define its regulatory boundaries. Garlinghouse also mentioned the SEC’s reluctance to approve Bitcoin spot exchange-traded funds (ETFs) as evidence of its hesitation to embrace the crypto industry.
Crypto industry’s resilience
Garlinghouse stressed that cryptocurrency technologies are here to stay, and recent approvals of multiple ETFs have further solidified their presence in the financial landscape. He highlighted the progress made by countries like Japan, the United Arab Emirates, the United Kingdom, and Switzerland in regulating their crypto industries. Garlinghouse pointed out that these nations have sizable economies and are actively working towards regulatory clarity, while the United States seems to prioritize political agendas over policy development.
Brad Garlinghouse’s criticism of SEC Chairman Gary Gensler’s regulatory approach underscores the ongoing challenges faced by the cryptocurrency industry in the United States. Garlinghouse’s suggestion to utilize AI, specifically ChatGPT, for regulatory guidance reflects the industry’s frustration with the lack of clear guidelines. As the crypto sector continues to evolve, stakeholders, including regulators, will need to find a balance between innovation and investor protection to ensure the industry’s sustainable growth.
