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 <li>Ripple Labs’ Chief Legal Officer, Stuart Alderoty, has criticized the SEC’s use of the term “crypto asset security,” arguing that the term lacks any legal foundation.</li>
 <li>Critics argue that the agency is overreaching its authority by trying to retroactively apply securities laws to a rapidly evolving class of digital assets.</li>
</ul>
The U.S. SEC’s measures targeting digital assets have garnered significant attention, and Ripple’s Chief Legal Officer has expressed dissatisfaction.
In a recent post on the<a href="https://x.com/s_alderoty/status/1830644070638850285" target="_blank" rel="noopener noreferrer nofollow"> X platform,</a> Ripple’s Chief Legal Officer, Stuart Aldetory harshly condemned the United States SEC for its repeated use of the term “ Crypto asset security,” arguing that “The term ‘crypto asset security’ is nowhere to be found in any statute—it’s a fabricated term with no legal basis. The SEC needs to stop trying to deceive judges by using it.”&nbsp;
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">
 The term 'crypto asset security' is nowhere to be found in any statute—it's a fabricated term with no legal basis. The SEC needs to stop trying to deceive judges by using it. <a href="https://t.co/CyNbUbeoYM" rel="noopener noreferrer nofollow">pic.twitter.com/CyNbUbeoYM</a>
 — Stuart Alderoty (@s_alderoty) <a href="https://twitter.com/s_alderoty/status/1830644070638850285?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">September 2, 2024</a>
</blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
This isn’t the first time the term has come under scrutiny. In a recent update to the SEC’s legal battle with crypto exchange Kraken, the Federal Court for the Northern District of California also expressed skepticism about the term, calling the “crypto asset security” concept “unclear at best and confusing at worst.”
The SEC has used the term&nbsp;“Crypto asset security”&nbsp;as a focal point in the ongoing conflict between the regulatory body and the digital asset sector. The SEC, via the Chairperson, has long maintained that many digital assets fall under the&nbsp;<a href="https://www.ethnews.com/secs-scrutiny-delays-solana-spot-etf-as-security-concerns-loom/" target="_blank" rel="noopener noreferrer nofollow">definition of a security.</a> This is in accordance with the Howey test,&nbsp;thereby subjecting them to the same regulatory framework that governs traditional financial instruments like stocks and bonds.
In essence, the Howey test is a legal framework outlined by the U.S. Supreme Court to determine whether a transaction qualifies as an investment contract and should be regulated. The Howey test consists of four criteria: an investment of money, expectation of profits, common enterprise, and reliance on the efforts of others.
Additionally, critics argue that the agency is overreaching its authority by trying to retroactively apply securities laws to a rapidly evolving digital assets class. This is contrary to a statement Gary Gensler made back in 2021, stating that the SEC did not have enough authority to regulate the industry and that only Congress could address the regulatory gap in the sector.&nbsp;
However, by the end of 2022, the tables had turned. Gensler reportedly claimed that the SEC had sufficient control to regulate cryptocurrency exchanges. Coinbase&nbsp;<a href="https://www.ethnews.com/coinbase-sues-sec-for-email-transparency-genslers-communications-key-to-fair-notice-debate/" target="_blank" rel="noopener noreferrer nofollow">highlighted</a> this in their legal war with the SEC in June 2023,&nbsp;stating that “The SEC’s claims lack all merit.”
Additionally,&nbsp;the SEC has faced criticism for using ambiguous terms like&nbsp;“Investment Contract,”&nbsp;“<a href="https://www.ethnews.com/ftx-creditors-could-face-delays-as-sec-probes-repayment-plan/" target="_blank" rel="noopener noreferrer nofollow">Stablecoins” as Securities</a>, and&nbsp;“Utility Token” vs. “Security Token.” The use of these terms raises eyebrows about the future of cryptocurrency regulation in the United States. The need for clear and consistent regulatory guidelines becomes increasingly urgent as the industry continues to grow and evolve.&nbsp;
The post <a href="https://www.ethnews.com/secs-crypto-asset-security-term-sparks-outrage-from-ripple-xrp-attorney/" rel="noopener noreferrer nofollow">SEC’s ‘Crypto Asset Security’ Term Sparks Outrage from Ripple (XRP) Attorney</a> appeared first on <a href="https://www.ethnews.com" rel="noopener noreferrer nofollow">ETHNews</a>.

SEC’s ‘Crypto Asset Security’ Term Sparks Outrage from Ripple (XRP) Attorney

ETHNews

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