Ripple’s recent victory against the SEC, while epic in its own right, is not a panacea. Hold your horses before popping the champagne and celebrating a crypto revolution just yet. The celebrations are just as legitimate – a David-and-Goliath battle won almost by accident. That said, this isn’t only about Ripple, it’s about the overall state of crypto and more critically, you, the people frequenting this blog.
Freedom's Price Consumer Protection
Understandably, Ripple CEO Brad Garlinghouse is ecstatic, taking aim at the SEC’s “war on crypto.” We should not kid ourselves: the innovation stifling regulator narrative is a super appealing story. He considers the US to be on a trajectory towards becoming more "pro-innovation"— let’s hope he’s right. Ripple has been increasing its US-based hiring, stimulating the economy along the way. They made waves by recently acquiring Hidden Road as part of a huge US$1.25 billion deal.
We’ll have more to say on this soon, let's not forget why the SEC was created in the first place. It's not just about hamstringing progress. It's about protecting people from getting scammed. Imagine buying into a crypto project based on hype only to see it crash and burn because of shady practices. That’s exactly the situation regulators are hoping to avoid.
Think of it like the Wild West. Unrestricted liberty is wonderful until someone sticks ’em up and takes your wagon. We don’t want sheriff’s deputies out there to stomp on the spirit of exploration—we want them out there to make sure everyone is playing the game fairly.
Innovation Stifled Or Prudent Caution
Garlinghouse claims the previous administration did not hear consumers who want to use crypto. To some extent, he would be correct. There's a genuine demand for crypto solutions. But that demand doesn’t make those basic safeguards any less necessary.
The question is not if we should regulate crypto, but how. Sure, overregulation can stifle innovation too, forcing companies such as Ripple to leave the country. Is that what we want? Absolutely not. Even with the very minimal oversight that exists today, safety violations are routinely ignored until disaster strikes. More dangerously, it creates an environment that is ripe for scams and market manipulation.
Consider the early days of the internet. Yet there was a similar tension between freedom and control. Too little regulation risked public safety and the benefits of this promising new industry. Too much, and the internet might have turned into a wild west of sex trafficking and rampant piracy. There is definitely a balance that can be struck, a regulatory middle ground that enables innovation but protects consumers and the public good.
The Hidden Road acquisition, clearing about 50 million daily micro-transactions valued at US$10 billion, is the first indication that it’s game on. Ripple’s aspiration to be the “largest non-bank prime broker in the world” is audacious. With great power comes great responsibility.
XRPs Role The Future Unfolds
Ripple obviously wants to use XRP’s strengths to make its business stronger. This is where things get really interesting. XRP has been central to many of the SEC’s complaints, but Ripple now intends to incorporate it more deeply.
This brings us to the unexpected connection: think about the airline industry after deregulation. Lower fares and more route choices led to tremendous consumer welfare. That same dynamic meant the consolidation that, some would say, left many regions with a much lower quality of service.
Is this a potential future for crypto? Will Ripple’s success pave the way to a future with just a few major players, thereby elbowing out smaller, more innovative projects? Will the pendulum swing from a positive decentralization back toward negative, dangerous centralized control?
These are the types of questions we should be asking. The answers are not easy and require critical reflection. You need to understand the upside there but the downside risk that exists in this space.
So we don’t just want clearer regulatory guidelines, we need these guidelines, and we need them right now. Not stifling guidelines that suffocate innovation, but rather guidelines that establish the parameters for promising, creative growth to flourish. No doubt, industry self-regulation can help, but it shouldn’t be our only answer. We can’t just have a strong regulatory framework— we need consumer education initiatives so that Americans can make informed decisions about investing in crypto.
Let’s take Ripple’s win as the jumping-off point for an honest discussion about what crypto regulation could and should look like going forward. All of these must happen in tandem by creating an ongoing conversation among responsible crypto entrepreneurs, regulators, and, most importantly you, the consumer. We should always look to find equilibrium between liberty and accountability. By doing so, we can all participate in the positive disruption of the crypto revolution, making it work for everyone—not just the privileged. So don’t be fooled by all the hoopla over Ripple’s win. Just keep in mind, it’s your financial future that’s at stake.
