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Ripple outlines possible regulatory framework for crypto industry in US

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Ripple, the company whose executives have often criticized the United States’ seeming lack of regulatory clarity on the cryptocurrency industry, has outlined its own “pragmatic” framework.

In a Tuesday post on its website, Ripple released its vision for a regulatory framework aimed at advancing innovation while protecting investors in the United States. According to the firm, regulators need to be encouraged to promote innovation sandboxes, some of the existing frameworks in the U.S. can be applied to cryptocurrencies and there should be “an active dialogue between regulators and market participants.”

Ripple advocated for the proposed measures as a way to provide regulatory clarity to all in the crypto space “in a way that an ad hoc, regulation-by-enforcement approach simply cannot.” According to CEO Brad Garlinghouse, the proposal was “designed to address and remedy the specific challenges” to the industry.

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In regard to regulatory sandboxes, the company said the “safe harbor” proposed by SEC Commissioner Hester Peirce under which network developers would have a grace period to build without being subject to certain federal securities laws would be necessary to “incentivize innovation.” Ripple acknowledged such a measure may not address “many mature projects” in the space.

The company also supported legislation applying to the digital asset space currently being considered by U.S. lawmakers. The firm said the Security Clarity Act, or SCA — which would change the legal status of any asset sold as an “investment contract” to an “investment contract asset” — would help to provide regulatory clarity for cryptocurrencies.

In addition, the Digital Commodity Exchange Act would supplement the SCA when securities laws would not apply to certain token projects, essentially making them more like commodities from a regulatory standpoint. The proposed legislation could give the Commodity Futures Trading Commission the authority to oversee digital asset exchanges handling such commodities.

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For addressing communication between the public and private sector, Ripple supported the Eliminate Barriers to Innovation Act introduced by Representative Patrick McHenry in April. The bill aims to clarify the role of the SEC and CFTC in the country’s efforts to regulate crypto but would also require the two agencies to establish a working group focused on digital assets.

“Developing an effective policy framework for cryptocurrencies will only be possible if there is clear communication and collaboration between private and public actors,” said Ripple’s head of public policy Susan Friedman. “That is the reason why we have proactively discussed the issue on a bipartisan basis with regulators and members of Congress […] These conversations have helped shape our perspective on the type of regulatory clarity the industry and broader ecosystem need from regulators, as well as the type of requirements regulators should demand from the industry.”

Ripple co-founder Chris Larsen, Garlinghouse, and CTO David Schwartz have all voiced concerns about the “patchwork” of regulations under which crypto firms are forced to navigate to operate in the United States. Though the company’s current headquarters are in San Francisco, the executives have previously hinted they were exploring leaving the U.S. behind for a “more friendly jurisdiction.”

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Ripple, SEC back in the ring, due to a Court of Appeals decision in a separate lawsuit

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Those following the SEC vs Ripple Labs lawsuit might have expected radio silence for the rest of the year, after the court pushed the discovery deadline to 14 January 2022. However, a new development in early December has caused a splash. Now, it seems that both the SEC and Ripple will need to take action.

Yet another deadline

A filing shared by defense lawyer and former federal prosecutor James K. Filan revealed that Judge Sarah Netburn ordered both parties in the case to file more documents. However, this was due to legal developments in a totally different court case.

Citing the “scope of the deliberative process privilege,” the judge stated,

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“In light of this decision, by December 8, 2021, the parties shall simultaneously file letter briefs no longer than three pages to supplement their arguments concerning Defendants’ motion to compel, ECF No. 289.”

What is deliberative process privilege? To refresh your memory, this protects an institution’s decision-making process from external parties – including defendants in the court, if need be.

In simple English, please

Outside the crypto world, the Natural Resources Defense Council sued the U.S. Environmental Protection Agency [EPA], which was ordered to produce specific documents about its pesticide policies. The EPA objected to this, and deliberative process privilege was a part of their reasoning for the same.

The United States Court of Appeals for the Second Circuit ruled that the EPA didn’t have to show all of its records concerning a policymaker’s role. What’s more, the court issued a new decision regarding what is covered under deliberative process privilege.

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Now, Ripple Labs is feeling the ripples. After all, the SEC claimed deliberative process privilege after the blockchain company filed a motion compelling the regulator to produce three additional email documents.

As previously reported, Ripple claimed the documents “appear to be Highly Relevant to the Defense.”

Naturally, the XRP community has been wondering whether this update helps or harms Ripple.

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For his part, attorney Jeremy Hogan claimed,

“…I’ve read the opinion and the law change slightly favors the SEC. Let’s see what the briefs say!”

In less than five days, both the SEC and Ripple will need to understand the new decision, and quickly submit their arguments. This has huge implications for Ripple’s motion to compel the SEC to produce the three documents.

Rain on Ripple’s parade?

The unexpected court development comes around a week after Ripple CEO Brad Garlinghouse expressed his optimism regarding the lawsuit. Voicing his belief that the case would end in 2022, he said,

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“Clearly we’re seeing good questions asked by the judge. And I think the judge realizes this is not just about Ripple, this will have broader implications.”

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Ripple vs. SEC Drama Update: Parties Have Three Days Left to Supplement Their Arguments

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Renowned corporate lawyer James Filan shares an order from the U.S. magistrate judge crucial for Ripple case.

Both Ripple Labs Inc. and the U.S. Securities and Exchanges Commission (SEC) should provide additional arguments to supplement their positions in three days.

New legal briefs should be filled before Dec. 8, 2021

According to the scanned copy of a document shared by Attorney Filan, U.S. Magistrate Judge Sarah Netburn has issued an order that asks Ripple Labs Inc. and the U.S. SEC to “simultaneously” file letter briefs.

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The briefs should be filed before Dec. 8, 2021. New papers should supplement the parties’ arguments regarding Ripple’s latest motion to compel.

These supplemental briefings should be filed as Deliberative Process Privilege.

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Mr. Filan’s audience is certain that the obligation to provide new briefs was hotly anticipated and should be interpreted as a small win for Ripple.

“The law change slightly favors the SEC”

At the same time, attorney Jeremy Hogan shares that this extraordinary document (“law change”) favors the position of the Securities and Exchange Commission.

However, commentators should wait for the release of new briefs, Mr. Hogan concludes. He compared the court order to the behavior of a “daddy” who changes his child’s bedtime.

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As covered by U.Today recently, the SEC accuses Ripple Labs Inc. and its key officials, Brad Garlinghouse and Chris Larsen, of offering illegal securities to U.S. citizens in the form of XRP tokens.

This year-long legal battle highlighted many crucial questions regarding crypto regulation in the U.S., such as the status of crypto tokens and securities.

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Will This Move By The Court Turntables of Ripple’s Stance Against The SEC?

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XRP has fallen prey to the global crypto market crash alongside other digital assets, which has left the entire space trembling. The crash has resulted in the industry shedding the market cap by 15.1% at $2,330,560,166,406. Traders and hodlers from the crypto town have been expressing concerns over the crash. As the target of $100,000 for BTC seems out of reach.

Which could persuade altcoins to embark on a massive rally towards the alt season. Another bummer for the XRP community seems to be around the block. As the court of appeal has ordered the parties to file supplemental briefing on Deliberative Process Privilege. Meanwhile, an XRP whale withdraws 150 million XRP from Binance into a private wallet.

XRP Enthusiasts Need To Be Vigilant This Coming Week!

Judge Netburn orders the parties to file a supplemental briefing on Deliberative Process Privilege in light of the recent second circuit case. The order states that on November 29th, 2021, the court of appeals issued a decision addressing the scope of the deliberative process privilege. 

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In light of the decision by December 8th, 2021, the parties shall simultaneously file letter briefs. No longer than three pages to supplement their arguments concerning defendants compel. The attorney cites that since the law has changed, the parties are being given a chance to re-brief as per the new law. 

He further mentions that DPP is important as to whether the SEC has to provide certain internal communications. About digital assets and whether they are securities. The attorney believes the law change to slightly give the SEC an upper hand. The increase in updates regarding the lawsuit has influx curiosity in the space.

Will This Be A Turning Point in The Legal Tussle?

The 8th of December also sees a hearing of Chief Executive Officers from platforms across the industry. The CEOs of the firms will be witnesses in the hearing scheduled on the 8th of the month. Sources suggest that the witness list includes the following delegates.

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  1. Jeremy Allaire, CEO of Circle Pay.
  2. Sam Bankman-Fried, CEO of FTX U.S.
  3. Brian Brooks, CEO of Bitfury Group.
  4. Chad Cascarilla, CEO of Paxos Global.
  5. Denelle Dixon, CEO of Stellar development foundation.
  6. Alesia Haas, CEO of Coinbase Inc, and CFO of Coinbase Global Inc.

On the other hand, U.S Senate Banking Committee Ranking Member Toomey had expressed disappointment. In the SEC chairman Gary Gensler’s response to the request of Senator for public guidance revolving around cryptocurrencies. The chairman’s response did not answer the cryptos the SEC views as securities and which it views as commodities.

Collectively, the protocol has been rising despite the odds. According to sources Bitrue cryptocurrency exchange is launching XRP ledger Nerian. An XRP whale withdraws 150 million XRP from Binance into a private wallet. Hopefully, the legal tussle prevails in favor of Ripple with the start of 2022.

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