Ripple urges Congress to define clear rules for digital assets after highlighting risks of ongoing regulatory uncertainty.
Ripple has warned that the draft legislation on the crypto market structure could entrench unchecked SEC authority and create lasting regulatory uncertainty for the digital asset industry.
In an August 5 letter to Tim Scott, the Senate Banking Committee Chairman, Ripple Chief Legal Officer Stuart Alderoty argued that the bill failed to provide the clarity it promises, especially around SEC jurisdiction, token classification, and the treatment of long-established digital assets like XRP.
“The current definition of ‘ancillary asset’ risks significant regulatory overreach because it effectively presumes that any token once offered in connection with an investment contract places future transactions of that token by the ‘originator’ under SEC jurisdiction—indefinitely,” Alderoty wrote.
The company argued that well-established tokens operating on open networks, including ETH, SOL, and XRP, should not face perpetual SEC oversight when current transactions don’t reflect securities characteristics.
Ripple called for Congress, not regulators, to establish objective criteria for applying the Howey test to digital assets. The company warned against codifying Howey “in vague or open-ended terms,” stating that this “would only deepen uncertainty, harming consumers and markets alike.”
The response also recommended that tokens traded freely for five or more years on permissionless networks should be “presumptively excluded from securities regulation,” and advocated for federal preemption of certain state laws to ensure regulatory consistency nationwide.
