Ripple has ramped up its dialogue with the U.S. Securities and Exchange Commission (SEC), advocating for a significant overhaul of regulations governing digital assets. In a recent policy letter, the company called on the SEC to classify XRP similarly to Bitcoin and Ethereum concerning capital requirements. Ripple believes this change is crucial to promote a more function-based regulatory environment, moving beyond outdated asset classifications.
Following a meeting with the SEC’s Crypto Task Force in March, Ripple addressed concerns regarding how current regulations impact the institutional utilization of digital assets. The company’s proposal emphasizes the need for clarity and consistency, arguing that the disparate treatment of similar assets creates hurdles for institutional markets.
In its submissions, Ripple articulated its case for function-based regulation, asserting that digital assets should be categorized based on their actual use rather than historical labels that do not reflect their operational functions. Ripple contended that assets used for settlement should be subject to uniform regulatory treatment. In this context, the company specifically highlighted XRP, Bitcoin, and Ethereum as examples of assets that require similar regulatory frameworks.
Ripple expressed concern that the current regulatory landscape imposes friction on institutions dealing with similar assets that face differing regulatory expectations. By fostering a more coherent regulatory environment, Ripple believes more institutions could enter the burgeoning tokenized markets.
Central to Ripple’s proposal is the treatment of stablecoins. The company urged regulators to recognize fully backed stablecoins as cash-equivalent instruments, citing RLUSD as a prime example under a verifiable mint-and-burn structure. Ripple argued that these assets should be classified as high-quality collateral without any “haircut” under existing capital adequacy frameworks. The firm emphasized that current capital requirements are limiting the adoption of stablecoins within regulated markets. They believe that removing these restrictions would pave the way for enhanced institutional engagement.
Additionally, Ripple’s letter proposed the establishment of an on-chain registry for tokenized securities, suggesting that blockchain technology could streamline ownership tracking and settlement processes surpassing traditional fragmented off-chain systems. The company highlighted that current infrastructures are inadequately equipped to handle the unique workflows associated with digital assets.
Ripple’s ongoing discussions with the SEC’s task force underscore its commitment to fostering a regulatory landscape that aligns with the real market uses of digital assets.
