Ripple CEO Says Crypto Regulation Needs to Be Clearer

Ripple CEO Brad Garlinghouse says he wants more clarity on the rules and regulations surrounding cryptocurrencies. Speaking on “Bloomberg Crypto,” Garlinghouse also says he expects more crypto ETFs and discusses how the 2024 elections could impact the crypto industry.

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It’s worth kind of going back to your case with the SEC first, because you are far along. And as we sit here today on February 20th, how would you describe how the dispute has changed? Well, I think for whatever reason, the SEC decided to make repeal their first

Major case around this and the reality prior to the case, we had been advocating for more clarity around the rules and regulations. And the good news has been other countries around the world have leaned into that and codified what should the rules and regulations, what’s unique

About crypto that needs to be changed? The FCC, frankly, has just hired more litigation that, you know, what we call regulation through enforcement and really just started suing lots of people. And what’s unfortunate is they have lost consistently. They lost the ripple case on everything they cared about.

I mean, even the sound bite you just had up your chair, Gensler is saying that a lot of these are securities. What the courts have said and the cases they have brought, and certainly the case with Ripple and the token XRP, the

Court determined that XRP is not in and of itself a security. When do you think that this will finally no longer be an overhang for you guys? You’re one of many companies that are fighting the SEC at this point in time.

But when can you call this an all clear? And do you think that this will make it so far as to reach higher courts or hard to predict whether it’s going to reach out to courts on everything we cared about?

We won against the SEC. Will the SEC appeal and move it up the courts? We’ll see. They sought approval to do what’s called an interlocutory appeal. The courts denied that. Also the case against me personally and Chris Larsen personally, it was dismissed entirely with prejudice.

So, look, from my point of view, the SEC has lost consistently. They lost the grayscale case. I think if you’re following the Coinbase case that the tone from the judge is, I think, pretty skeptical about some of the SEC’s arguments. It stops, I think, when the SEC either

Realizes they’re losing consistently, consistently, or you have Congress lean in and writes new legislation that’s probably going to be hard in an election year. Maybe we’ll see legislation around Stablecoins this year, but I’m hopeful and we’ll continue to advocate in Washington. Well, you mentioned the grayscale case,

Brad, it’s Kelly in Washington. Obviously, that was pretty instrumental in ultimately the SEC granting approval to not just grayscale’s conversion to a spot ETF gbtc that is, but spot Bitcoin ETFs more broadly. I’m sure you’ve seen there’s blogs out there about potentially an XRP ETF being

In the future. What do you make of that speculation? Well, Kelly, good to see you. I think it only makes sense there will be other ETFs too. It’s a little like, you know, the earliest days of the stock market. You don’t really want exposure to one

Stock or one company. You want to typically think about diversifying risk and what have you. And so I think we will see other ETFs when we will see them is hard to predict. You know, the sad reality of what we saw with the Bitcoin ETF is it was only

Because the courts forced the SEC SEC hand and really chair Gensler’s hand that we saw that finally come to fruition. And look, in my opinion, it makes these markets safer, it makes them more robust. And so this is good for the investment community. It’s kind of lean into that.

So you would welcome an XRP ETF then? We would certainly welcome it. And I think it’s inevitable that there’ll be, you know, multiple ETFs around different tokens. I think you’ll even see ETFs potentially around baskets that also, I think further diversify that risk given there’s so much excitement around the ETF dynamic here.

Are you in talks with the largest issuers, particularly BlackRock, to get this done? Well, I’m not going to comment on that. I know BlackRock has said some things publicly. You know, we think it makes sense for the XRP community overall. You know, Ripple obviously is a very important stakeholder in the XRP

Ecosystem, but we’re not the only player. And we’ve seen even before the SCC lawsuit, XRP was the second most valuable digital asset, I think because of the headwinds of that lawsuit. You know, we’ve now seen that largely abate, but the long term view on these

Things is about, you know, how do you create utility and really solve real world problems with these different digital assets. Bitcoin is doing that very well as a store of value. XRP and its dynamics are very fast, very efficient and low cost on a per transaction basis makes it ideal for payments.

And that’s where Ripple really has leaned into as a company. Well, let’s talk about where else Ripple is leaning in. You’ve recently acquired standard custody. What is that going to do for your company? Well, look, we think there’s some basic building blocks around crypto that are

Important to make crypto successful. Custody is an important part of that for institutions to be able to custody both their own as well as their customers. Digital assets, we think is very important. We’ve made two acquisitions over the last year in this space.

One was a company in Switzerland and then more recently a. Standard custody. Standard custody in particular. It has a trust license here in New York, which also makes it very valuable. Everything we have done at Ripple has compliant first, and I think this year,

2024, with FTC’s behind us with some of the finance dynamics largely behind us, I think has to be a compliance first mindset for all of the crypto industry. How far can your foray into custody really go? You think about what’s happening with Coinbase and its role in custody when it

Comes to these ETFs. How do you envision your your role in custody expanding over time? Well, there’s a it’s a pretty fragmented market today. Coinbase is a player player. You have five or ten players that have small pieces of market share. We already have signed up with Ripple’s custody solution, HSBC.

We have BBVA, a leading partner of ours called Zorya. So, you know, we feel very good about the momentum we have to kind of the larger banking infrastructure. But we also intend to compete at a more regional financial institutions, as well as with some corporates who are starting

To look at custody in their own crypto also. Right as we have this conversation with you, Nikki Haley, the Republican presidential candidate, is giving a state of the race speech in South Carolina with that primary just days away. She says she’s not going anywhere. She has no plans to quit the race.

But just a few weeks ago on the show, Tim Draper, of course, a pretty prominent Bitcoin investor, was talking about what kind of president she could be, what she could do for innovation like digital assets. And I just wonder, as Ripple is looking ahead to 2024, how consequential do you

Think ultimately who’s in the White House, what the composition of Congress could look like as well down the ballot will be in deciding the future of digital assets? Is there anyone you would support? Well, look, at the most macro level. I think it’s incredibly important that

The US regain a leadership position around crypto regulation. We are a laggard. We are behind other major countries like the UK. I mean the European Union as a 27 country membership is ahead of us, that they’ve gotten 27 countries to agree to things that we as one country can’t get our arms around.

So I think it’s very important, you know, over 20% of the US population already has direct or indirect exposure to crypto. And so it only makes sense that it’s an issue. As you probably know, Ripple, Andreessen Horowitz and Coinbase put together a

Super PAC and we each put $25 million behind it to support candidates that are pro crypto and promote constructive regulation and engagement, really being pro-innovation but protecting consumers at the same time. I think that for a lot of politicians, crypto has become a sound bite where

They don’t really understand how crypto works and the they say things that actually don’t even back up with facts. So, you know, I do think it’s a it’s a campaign issue. Ripple has leaned into that. I personally, you know, my donations are bipartisan, but certainly pro crypto and

That’ll continue to be the case. I’ll even highlight just today, John Deaton, a very prominent pro crypto guy, announced he’s running against Elizabeth Warren. So I think you’re going to continue to see that. Correct. So with that said, also, we know that Elizabeth Warren is trying to make the

Crypto industry’s regulation around AML laws and KYC laws more akin to that of banking. Is this something a lot of the crypto industry has been very upset about? Is this something you’re actively fighting? Oh, no, on the contrary. I mean, I would actually argue that Elizabeth Warren has it wrong.

I mean, if you sign up on Coinbase, you have to get KYC, know your customer, you have to go through a verification process of providing your licenses. And they do that verification. And as I said before, the vast, vast,

Vast majority of people who are in the crypto industry are good actors who want to play by the rules. We need to know what those rules are sometimes, but that KYC and AML are not rules that are confusing. And I find that the vast majority of the industry players are already leaning

Into that. I think Elizabeth Warren wants us to believe that those are things that somehow crypto circumventing. But that’s not the real world.