Yesterday’s congressional hearing of US Securities and Exchange Commission chairman Gary Gensler before the House Financial Services Committee was a significant moment for Ripple, XRP investors, and the crypto industry as a whole. Though Gensler was confronted with tough questions from the committee, he avoided giving any regulatory clarity by dodging questions and providing incomplete answers.
One of the most important questions asked of Gensler, by Warren Davidson, was whether he believes XRP is a security. Gensler refused to give a yes or no answer, instead stating that the question of whether XRP is a security is currently in court, and that there are active discussions on the issue.
During the hearing, a strong case was made for Ripple’s fair notice defense by Committee Chairman Patrick McHenry when he repeatedly asked Gensler if Ethereum (ETH) should be classified as a security or commodity. The fair notice defense states that no one should be forced to “speculate on the meaning of laws.”
Gensler dodged the questions, while McHenry sharpened his tone, asking Gensler to make a classification of Ethereum as either a security or commodity. Gensler responded only with, “It depends on the facts and law,” while McHenry, visibly annoyed, interrupted the SEC chairman and said, “I am asking you about the facts and the law sitting in your seat and the judgment you are making.” Again, Gensler replied only that he can’t “prejudge.”
During the hearing, all of the committee’s Republicans sent a letter to SEC Chairman Gensler accusing him of trying to force digital asset trading platforms to “come in and register” under his nonexistent registration process. Additionally, Warren Davidson introduced a bill proposing restructuring the SEC and firing Gensler.
With the Fair Notice, Ripple had already set one of the most compelling arguments, which has likely become even stronger since the hearing. Judge Analisa Torres is not likely to have missed the hearing and Ripple’s case’s chances getting strengthened are high.
At press time, the XRP price stood at $0.4901, seeing a drop along with a market-wide correction. However, the regulatory uncertainty that has hampered Ripple’s progress may soon be resolved thanks to the hearing’s outcome.
