The lawsuit brought by the regulator alleges that Ripple’s executives sold $1.3 billion of the company’s digital asset XRP, which the SEC is calling an unlicensed security. Ripple maintains that XRP should not be classified as a security.
Garlinghouse told CNBC that even though the justice system is “slow-moving,” they are still experiencing “pretty good progress,” and the judge has been asking important questions.
“And I think the judge realizes this is not just about Ripple, this will have broader implications,” Garlinghouse said. He added that he thinks the case will reach a conclusion in 2022.
Regulators worldwide are putting cryptocurrency under the spotlight as the unregulated industry continues to grab headlines and gain value. A global framework is being considered as individual countries hammer out guidelines.
Ripple’s technology enables financial services companies to send cross-border transfers less expensively and offers On-Demand Liquidity, its XRP product for cross-border payments.
XRP is the seventh-largest cryptocurrency worldwide, but prior to the SEC’s lawsuit, it was the third biggest behind Bitcoin and Ethereum, according to reports. The suit prompted Coinbase and other exchanges to delist XRP.
In its March filing, Ripple pointed to Bitcoin and Ethereum and wanted to know why those assets were exempt from the SEC.
Privately held, Ripple’s most recent valuation was estimated at $10 billion and is backed by major investors including Alphabet’s venture capital arm GV, Andreessen Horowitz and Japan’s SBI Holdings.
Last week, Ripple released its own framework for cryptocurrency and digital asset regulation, A Real Approach to Cryptocurrency Regulation.
“Cryptocurrency and blockchain technology need clear regulatory and licensing frameworks designed to address and remedy the specific challenges to our industry. All of the proposed measures discussed in this framework aim to provide legal clarity to industry, markets, and consumers in a way that a regulation-by-enforcement approach simply cannot,” Garlinghouse said in a blog post announcing the framework.