U.S. Rep Mentions XRP Legal Status as Non-Security

U.S. Congressman Tom Emmer earmarked Ripple’s court victory against the SEC as a sterling example of regulatory abuse by the agency.

In July, payment-focused crypto company Ripple secured a landmark victory against the United States Securities and Exchange Commission (SEC). U.S. District Court Judge Analisa Torres ruled that secondary sales of XRP may be considered securities transactions. However, she also confirmed for the first time that XRP sold on secondary markets was not securities as the SEC had claimed.

That victory, which came against the odds, has since been cited by other crypto companies, such as Coinbase and Binance, in their separate legal battle against the regulatory agency. Even more notable is that the ruling could be one of the bases for an amendment that denies the SEC funding to continue its alleged anti-crypto attacks.

Rep Emmer Acknowledges Ripple Win

In a November 8 congressional hearing, Rep. Tom Emmer, who represents Minnesota’s sixth congressional district, filed an amendment to the federal budget. The budget sought to limit the SEC’s ability to use taxpayer funds for its enforcement actions against crypto-related businesses.

Here is the US House Congressional Record from November 8, 2023 in which Emmer mentions that #XRP was found not to be a security by the courts.

(NB, image edited to one column) pic.twitter.com/M07fp0g1N6

— WrathofKahneman (@WKahneman) December 5, 2023

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Rep. Tom Emmer, in his argument, noted that the SEC has sought to use a regulation-by-enforcement approach in the crypto space. While the agency has clamped down on “dozens” of crypto firms, Emmer notes that the securities regulator has never finalized “a single rule or regulation for the industry to follow.”

At the same time, he argued, like most crypto firms, that the SEC does not have the congressional right to regulate the digital asset space. Rep. Emmer cited comments from the SEC’s enforcement division in which an official confirmed that the agency was pursuing action against companies outside its jurisdiction.

In this vein, the Congressman mentioned Ripple’s victory against the SEC. He wrote, “In July, the Southern District of New York sided against the SEC, asserting that XRP is not itself a security.” 

Given that the Ripple case was considered a landmark lawsuit by the SEC, Emmer suggested that losing issues surrounding the case underlined the agency’s abuse of regulatory power. He expressed conviction that barring the SEC from using a portion of its budget to enforce action against crypto firms would help curb such abuses.

The amendment has since advanced with an inclusion in the House’s budget bill. It remains to be seen whether the final reconciliation committee approves the bill in its current state, an outcome that would effectively handicap the SEC’s war chest for attacking crypto firms.