A new court ruling regarding XRP has urged the demand for clear rules in the ever-changing crypto world. US Senator Cynthia Lummis, a passionate advocate of BTC and blockchain technology, has called crypto for framework following Judge Analisa Torres’ decision.
Torres ruled that Ripple’s XRP Token should not be deemed a security when sold on crypto exchanges. Lummis emphasized the importance of clarity in the crypto space on Twitter.
She said the recent decision underscores the urgent need for Congress to build a comprehensive regulatory framework that focuses on users’ protection. Moreover, the Lummis also talked about the Howey Test. It is a legal standard to assess whether an investment should be considered a security.
However, she has been outspoken about maintaining the reliability of this test while acknowledging the need to apply it accurately to digital assets. Furthermore, she specifically mentioned Responsible Financial Innovation Act, also called the Lummis-Gillibrand Bill. Senator Kirsten Gillibrand and Senator Lummis introduced this bill in 2022.
The bill would make it necessary for companies to tell customers about the risks of cryptocurrencies. They must show how much reserves they have and talk to customers using straightforward language.
The bill gives the authority to Commodities Futures Trading Commission to supervise non-securities virtual assets. It also makes it mandatory for all cryptocurrency exchanges to comply with the agency.
My statement in response to the Southern District of New York’s ruling in Securities and Exchange Commission v Ripple Labs, Inc. pic.twitter.com/bmIxR0AmhT
— Senator Cynthia Lummis (@SenLummis) July 14, 2023
The main goal of this legislation is to bring transparency and establish clear rules for crypto assets, aligning them with the interpretation of the Howey test.
Crypto Regulatory Framework
The legal dispute between US SEC and Ripple Labs significantly impacts how digital assets are regulated in the region. However, the court’s decision on XRP could set a model for regulating crypto, shaping the industry’s future.
Notably, the lack of clear regulations plunged traders and investors into a state of uncertainty. As the crypto market grows rapidly, lawmakers must address the challenges associated with emerging technologies.
Having clear regulations is crucial for encouraging wider acceptance of cryptocurrencies and attracting institutional investors. The XRP verdict gives Ripple some success. Meanwhile, we still don’t know how Congress will react to Lummis’s request for better cryptocurrency rules.
Lummis said in an interview:
“We know how to regulate it. We know how to safely define what is a commodity and what is a security.”