Ripple's chief legal officer Stuart Alderoty has outlined key principles for the SEC that he believes are critical for regulating crypto assets in 2025.
SEC Jurisdiction and Regulation
Stuart Alderoty emphasized that the SEC can only regulate security transactions. He stated that the SEC cannot police simple asset sales without post-sale obligations. He cited the example of selling a gold bar: selling it with rights to shares in a gold mine is a securities transaction, while selling it without such rights is merely an asset sale.
Criticism of Cryptocurrency Classification Approach
Alderoty criticized the theory that a token can shift its status from a security to a non-security. He views it as a fallacy with no legal basis. The SEC has faced criticism for extending its jurisdiction by labeling crypto assets as securities. According to Alderoty, crypto tokens cannot be classified as securities even though they can be involved in securities transactions.
Future of SEC Regulation
The SEC's aggressive regulation by enforcement is expected to change after the departure of SEC Chair Gary Gensler. Paul Atkins, Gensler's likely successor, is anticipated to take a friendlier stance. However, a recent New York Post report suggests the crypto industry may not receive leniency. Alderoty has urged the next SEC chair to end non-fraud cases and work with Congress on clear crypto regulations.
Alderoty expresses hope that SEC regulation of cryptocurrencies will become more predictable and fair. His suggestions highlight the need for clear distinction between securities transactions and asset sales, and fostering clear rules in collaboration with Congress.
