Ripple, unlike any other cryptocurrency firm, has been engaged in an ongoing battle with the SEC. Despite the legal disputes, the SEC vs Ripple cases are still ongoing, and recently, the SEC has indicated its intention to potentially sue the XRP issuer through a new avenue.
For the past four years, the XRP issuer has been fighting against the SEC in court. These legal battles have significantly hindered the company, impeding innovation and ultimately stunting the growth of XRP. In response, Ripple has announced its plans to introduce a stablecoin, which would be pegged to the US dollar, in order to compete with major stablecoin issuers like Tether and CENTRE (a collaboration between Coinbase and Circle).
However, Ripple Labs’ efforts to launch the stablecoin have encountered yet another obstacle as the SEC claims that the stablecoin qualifies as an unregistered securities offering, just like XRP. The company unveiled its stablecoin plans last month, and since then, the regulator has not relented.
The SEC’s objection to Ripple Labs’ stablecoin project stems from its belief that the XRP issuer is involved in the business of issuing unregistered securities, a practice it has allegedly been engaged in for years. In a filing, the SEC stated, “Ripple’s primary business continues to be, as it has been since 2013, unregistered sales of XRP. It also plans to issue a new unregistered crypto asset.”
Although the XRP issuer has achieved some minor victories against the SEC during the four-year legal battle, the SEC reportedly demanded a $2 billion fine from Ripple Labs. In response, the defendant offered a mere $10 million, which the SEC deems significantly insufficient given the alleged violations of the law by the XRP issuers.
During an interview with CNN, Ripple CEO Brad Garlinghouse hinted that a stablecoin could be a viable alternative to XRP under the scrutiny of the SEC. He stated, “That certainly could be part of the solution. I think there is a certain strangeness that the SEC has kind of picked winners here: it said that Bitcoin is not a security, it said that Ether is not a security, but really everything else, I think, is kind of at risk. Particularly given what they have done in the lawsuit against Ripple. But, you know, we could do that.”
Unfortunately, the SEC shares a similar perspective regarding the yet-to-be-launched stablecoin and its potential regulatory concerns.
