After a long wait, the time has finally come. Gary Gensler is set to appear for his highly anticipated nomination hearing today, March 2, to confirm his nomination to be the next chairman of the U.S. Securities and Exchange Commission (SEC) before the U.S. Senate Banking Committee. For Ripple, this comes at a time when the company is facing a high-profile lawsuit from the SEC.
In a recent joint statement with the SEC, Ripple said it was unable to reach a settlement agreement with the previous SEC administration led by Jay Clayton. At the same time, however, Ripple Labs gave XRP investors hope for a quick settlement with the SEC by holding out the prospect of new talks with Gary Gensler once he takes over the agency’s reins.
Gensler’s speech raises hope for Ripple
The hearing document, which was pre-released yesterday, could be another glimmer of hope that Gensler is receptive to a quick resolution of the Ripple litigation and related legal uncertainty for cryptocurrencies in the United States. While Gensler does not directly mention cryptocurrencies, let alone XRP and Ripple, in the opening statement, he does allude to them.
Gensler will explain today that financial markets are undergoing a transformation and can benefit from emerging technologies:
We cannot take any of this for granted. Markets—and technology—are always changing. Our rules have to change along with them. In my current role as a professor at MIT, I research and teach on the intersection of technology and finance. I believe financial technology can be a powerful force for good—but only if we continue to harness the core values of the SEC in service of investors, issuers, and the public.
Gensler will also point out that “Congress created the SEC to protect investors, to maintain fair, orderly, and efficient markets; and to facilitate capital formation.” This, however, requires “clear rules” for “novel financial instruments.” Otherwise, people will suffer harm, as the new SEC chairman will elaborate. It’s anyone’s guess whether this is an allusion to the massive losses for XRP investors after the SEC lawsuit was filed. Gensler will say:
In the decades since, we have seen that when the SEC does its job—when there are clear rules of the road and a cop on the beat to enforce them—our economy grows and our nation prospers. But when we take our eyes off the ball—when we fail to root out wrongdoing, or to adapt to new technologies, or to really understand novel financial instruments—things can go very wrong. And when that happens, people get hurt.