“Senators Cynthia Lummis and Kirsten Gillibrand continue to advance crypto policy with their draft stablecoin bill. There is much left to be done, but great to also see others in Congress now engaging positively with crypto regulation. Innovation is not (and should never be) partisan.”
The bill comes at a pivotal time, as the SEC targets an increasing number of crypto firms with lawsuits.
The Payment Stablecoins Act and Ripple
In April, Ripple announced plans to launch its very own stablecoin. Features of the stablecoin include a 1:1 peg with the US dollar and backed 100% by US dollar deposits, short-term government treasuries, and other cash equivalents.
Progress of the Lummis-Gillibrand Payment Stablecoin Act could facilitate the launch of a Ripple Stablecoin.
Senators Lummis and Gillibrand are well-versed in the digital asset space. In 2022, Senators Lummis and Gillibrand introduced the Responsible Financial Innovation Act. The bill also aims to drive innovation while protecting US consumers. However, its passage has been slow as the bill gives the Commodity Futures Trading Commission more authority to oversee the digital asset space.
Significantly, the lack of progress leaves Ripple and other crypto firms exposed to the SEC’s reign of regulation through enforcement.
SEC vs. Ripple: April 22 Opposition Brief Looming
There were no SEC v Ripple case-related updates for investors to consider on Wednesday. However, April 22 is the next significant date in the amended court briefing schedule. Ripple must file its opposition brief to the SEC’s remedy-related opening brief.
Successfully addressing issues related to post-complaint XRP sales to institutional investors could further provoke the SEC. The SEC argued for a $2 billion disgorgement and prohibition from selling XRP to US institutional investors as the penalty for breaching US securities laws.
A favorable outcome for Ripple could further incentivize the SEC to appeal against the Programmatic Sales of XRP ruling. In July 2023, Judge Analisa Torres ruled that programmatic sales of XRP do not satisfy the third prong of the Howey Test.
The SEC revealed plans to appeal against the ruling in August 2023 by filing a motion for interlocutory appeal. However, the court denied the motion in October 2023, forcing the SEC to wait until the end of the case before filing an appeal. The ongoing threat of an appeal remains an XRP headwind.