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Ripple’s head of govt relations: US classification of crypto assets does not work

On October 21, Ripple’s global head of government relations, Michelle Bond, during a panel discussion at the Chamber of Digital Commerce, spoke about the current and potential future improvements in legislation and regulation in the crypto-asset space. During the talk, Bond stated that Ripple has been operating in the regulated space for the last 7 years.

“We’re actually actively engaged with 50 governments worldwide, making sure to comply with all AML, BSA, CFT and other requirements.”

She also stated that there are misconceptions about how blockchain is unregulated. She confirmed that Ripple is not only regulated, but also has a money services business license with FinCEN and holds a BitLicense from the New York State Department of Financial Services. 

Additionally, she spoke about how Ripple is not consumer-facing, and that the entities they partner with are all regulated financial institutions such as banks and payment providers that all have their own AML and FinCEN requirements.

“We very much operate within the regulated framework. We also partner with exchanges that are regulated as money services business and registered with FinCEN.”

Bond also claimed that Ripple conducts its own checks before onboarding a client, making sure they comply with the necessary requirements and making them sign a licensing agreement with Ripple to ensure they maintain best practices.

On the topic of legislative initiatives, she said that there are currently many focused on enhancements, anti-money laundering and classification of digital assets. Further, she spoke about a few pending legislation initiatives which Ripple is in support of.

“We welcome seeing legislation that’s pending, for example, the Token Taxonomy Act. There has been a lot of legislative activity in the AML space as well that has focused on technological enhancements designed to help government agencies.”

Among the pending initiatives, she spoke about the Advancing Innovation to Assist Law Enforcement bill which requires FinCEN to use emerging technologies such as artificial intelligence, blockchain and digital identity technologies to aid them in doing their jobs.

“We encourage FinCEN to use [these technologies] so they can internalize it, conduct a study and submit reports to the senate banking committee, using these technologies for the benefit of the government.”

Bond also brought up the FinCEN Improvement Act, which requires FinCEN to co-ordinate closely with foreign regulatory authorities and financial intelligence units to ensure their alignment with them. Another interesting bill that was mentioned was regarding the Department of Homeland Security, which has already been passed and is awaiting Senate consideration. The bill focused on enabling the DHS to study whether individuals are using blockchain and digital currencies to finance terrorism and other illicit activities.

“FinCEN has really been a leader in this space, but the issue we’re seeing as a company is that the broader crypto-asset framework in the U.S. does not work,… and is really related to the classification of digital assets. The Howey Test has been expanded from 4 factors to 38 factors, so there has been regulatory confusion, and a lot of clarity is needed.”

She also spoke about how the SEC commissioner, Hester Peirce, in referring to the guidance provided by them in April, called it a ‘Jackson Pollock painting approach’, and how that confusion has been difficult for the industry.

“We understand and appreciate that the SEC is trying to issue guidance — it has been difficult. I do think that they CFTC under chairman Heath Tarbert has been great, we’ve been encouraged to see that he’s highlighting and raising the importance of regulation in this space and continuing with former chairman Carlos’ initiatives.”

Source: ambcrypto

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