Ripple won a battle, but the war is far from over - Felix Shipkevitch on the legal challenges for U.S. crypto Bitcoin crypto cryptocurrency
- 2023 has seen a surge in legal and regulatory developments for digital assets, leaving many investors with unanswered questions and uncertainty about the future of the industry and how to invest in cryptocurrencies in a safe, secure, and legal manner.
He added that from a high-level perspective, Nasdaq just wants to get its ducks in a row so it can get the necessary licensing before it continues to pursue offering crypto custody services. “They just want to finalize, get that license, and then they probably restart that,” he said.
“Judge Rakoff completely disagreed, and actually specifically said in the decision in the Terraform case that he doesn't agree with that ruling,” he said. “There are also a lot of unanswered questions in terms of, is it truly not a security for both institutional and retail investors?” He added that there is a possibility that this case could actually end up being litigated before the Supreme Court. “It might be a very important win for Ripple, but that doesn’t mean it's an important win long-term,” he said. “Ripple may have won one battle, but they have not yet won the war.”
One area of the Ripple case that Shipkevich pushed back on was the use of the Howey test to judge whether an asset is a security or a commodity. The Howey case “involves orange groves in the State of Florida from the 1940s,” he said. “While we do take legal precedent, the products and the times have changed. We are applying a case from 70-plus years ago, and frankly, that case should not be applied in many instances when it comes to crypto.
“Many small and mid-size CFTC-registered companies ended up closing their doors due to extremely burdensome and costly regulatory compliance,” he added. “These entities were never part of the 2008 financial meltdown problem. Between 2010 and 2013, I was sad to see legitimate and compliant US commodities business close their doors while the big swap dealers swallowed up the rest of the commodities market.
“I love the crypto space, I think it's fantastic,” he said. “I just find that there are a lot of people who are just salivating over something that's very small. We need to be mindful of the potential bigger outcome, which has a real possibility to be adverse to the crypto space.”Shipkevich said that when it comes to regulatory clarity for the U.S. crypto industry, the process “is going to take years,” adding, “It’s not a short-term road.
“I've been to all those countries, I've met with companies and some of their regulators. They have taken a very different approach,” he said. “They gave info on what you can do as well as what is not allowed. If you aren’t sure what to do, they say to submit an application and they’ll discuss it with you.”
“The federal government does a pretty decent job in trying to put some bad people away, but it also has done a pretty bad job in certain areas where people with a lot of money were able to get access, like FTX,” he said. “Where are all those politicians that pocketed tens of millions of dollars? Have they given all that money back? Where was the SEC that I'm sure knew of these meetings? SBF had everybody in their pocket.
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