Ripple CEO: Cryptocurrency Market Has 'Outsized' Reaction to SEC Announcement


Brad Garlinghouse, the CEO in Ripple, a blockchain firm that oversees the $32 billion Ripple network, said that the market has demonstrated an outsized reaction to the announcement of the US Securities and Exchange Commission (SEC).

SEC Requires Exchanges to Register

On March 7, the SEC noted that cryptocurrency exchanges and electronic asset trading platforms must register with the SEC so as to run an infrastructure that enables consumers to exchange tokens, which the SEC has acknowledged as securities.

The SEC composed in a public statement entitled «Statement on Potentially Unlawful Online Platforms for Trading Digital Assets:»

The SEC staff has concerns that many online trading platforms seem to investors as SEC-registered and regulated marketplaces when they aren't. Many programs refer to themselves as «exchanges,» which can give the misimpression to investors that they're controlled or meet the regulatory standards of a national securities exchange."

In response to the market's reaction to the announcement of the SEC which led the value of most cryptocurrencies to fall from substantial margins, Garlinghouse noted that cryptocurrency exchanges have the choice to de-list ICO tokens or simply register with the agency, and that the SEC's regulation does not hugely impact cryptocurrency trading platforms in a negative manner.

" More My POV on the SEC statement today — the industry is having an outsized reaction. Exchanges ultimately have three options before them: de-list ICOs, enroll, or close. Certainly large implications for ETH awarded ERC20 tokens," said Garlinghouse.

Can SEC Cause the Recent Correction?

The current market correction that led the price of bitcoin to drop to $9,000 and other major cryptocurrencies to experience a drastic fall in value was caused by three major factors: the massive sell-off of bitcoin from the Mt. Gox trustee, the SEC announcement, along with the Japanese government's penalization of local trading platforms.

Consequently, it is highly unlikely that the announcement of the SEC solely caused the market to fall by more than $70 billion instantly. On March 6, the valuation of the cryptocurrency market reached $470 billion. As of March 8, the evaluation of the cryptocurrency market stays below $380 billion.

As Garlinghouse highlighted, the SEC's decision to require exchanges to register with the agency for record ERC20 tokens or ICOs only impacts tokens launched in addition to the Ethereum network which are considered as securities by the SEC.

Clayton explained that while ICOs are securities, others are «accurate cryptocurrencies.»

Given that many cryptocurrency exchanges are already well controlled and registered with both federal and state government agencies, it is unlikely that the recent announcement of the SEC is going to have a major impact on the market in the mid-term.