Schwartz Criticizes SEC

Ripple CTO David Schwartz made statements about the latest Wells notification sent by the US Securities and Exchange Commission (SEC) to Coinbase.

Schwartz, the architect of XRP Ledger, took to Twitter to criticize the SEC for failing to provide clear guidance on cryptocurrency regulations. A Wells notice is a formal notice that gives the buyer an opportunity to respond to the charges before the regulator takes the case to court.

Schwarz’s comments came in response to Coinbase’s chief legal counsel, Paul Grewal, stating that the SEC should provide reasonable rules for cryptocurrencies in the United States and that Coinbase is willing to follow suit. In addition, Grewal noted that the SEC’s approach to digital assets is not fair or reasonable, and that regulatory and legislative actions are better tools than enforcement actions. Coinbase is confident about the legality of its assets and services and is open to a legal process to ensure clarity.

Coinbase has met with the SEC more than 30 times over the course of nine months, but it was only Coinbase that spoke. Coinbase’s sharing and exchange services have remained largely unchanged since 2021, with the core business model remaining the same. Coinbase’s stance is that the US crypto regulatory environment needs more direction, not more sanctions. The company also stated that its sharing services are not securities according to any legal standards, including the Howey test.

Schwartz also addressed the reason why Ripple did not request a “no action” letter from the regulator prior to launching XRP. In response, he tweeted that he was not part of the process. At the same time, he suggested that the fact that no other crypto companies had a productive outcome from this process made it unlikely that his company would have taken advantage of it.