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‘Crushing’ regulations could drive Ripple out of US

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Ripple is considering relocating to Europe or Asia amid growing frustration at the lack of regulatory clarity in the United States.

Speaking to Fortune Magazine’s Jeff John Roberts at the Oct. 6 LA Blockchain Summit, Ripple co-founder Chris Larsen said the United States was “woefully behind” in preparing for the cryptocurrency-based next generation of a global financial system. Coupled with U.S. authorities’ policy on “regulation through enforcement” and Ripple may consider leaving the country behind entirely.

“The message is blockchain and digital currencies are not welcome in the U.S.,” Larsen said. “You want to be in this business, you probably should be going somewhere else. To be honest with you, we’re even looking at relocating our headquarters to a much more friendly jurisdiction.”

Chris Larsen speaking at LA Blockchain Summit

Larsen stated the firm was considering moving to countries like the U.K., Switzerland, Singapore, or Japan, because in the U.S., “all things blockchain and digital currency start and end” with regulatory bodies like the Securities and Exchange Commission (SEC).

“I don’t think that the posture at the SEC today can possibly get worse for [the crypto and blockchain] industry. It’s just ‘crush it and push it away.’”

Ripple CEO Brad Garlinghouse explained further in a Tweet. “Responsible players like Ripple aren’t looking to avoid rules, we just want to operate in a jurisdiction where the rules are clear,” he said.

Ripple faces a number of class-action lawsuits alleging the firm sold its XRP token in an unregistered securities offering. The SEC has not released any official statement on the matter following its 2019 publication on a regulatory framework for digital assets.

As a result, the crypto firm continues to be called to court partly over an apparent lack of regulatory clarity from the government agency. A federal judge recently denied a motion by Ripple to dismiss a lawsuit filed by investor Vladi Zakinov in 2018 alleging the XRP token is a security under California law.





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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.