Based in the United States, the Blockchain Association has decided to show its support for Ripple Labs, amidst the company’s ongoing legal battle with the Securities and Exchange Commission (SEC).
The crypto advocacy group stated that the case could prove to be a turning point for the entire crypto industry.
The advocacy group made its announcement via a post on October 28th in which it said that it would file an amicus brief to support the American crypto economy.
This is called as ‘friend in the court’ and the brief would be filed in the enforcement action of the SEC against Ripple Labs.
The SEC had launched a lawsuit against the company almost two years ago, along with its current chief executive Brad Garlinghouse and former chief executive Christian Larsen.
According to the lawsuit filed in December 2020, the company and its executives had conducted an illegal securities offering using the XRP token and raised $1.3 billion.
The Blockchain Association wrote that the case against Ripple Labs was just one more in the series of enforcement actions that the SEC has taken or regulating the crypto space.
It said that it shows that the SEC wants to legitimize and cements its own interpretation of the Howey test, which is unnecessarily broad.
The Howey test is aimed at determining what can be considered an investment contract, which would mean that it is subject to the securities laws in the US.
The Blockchain Association outlined its own perspective in the brief and said that the views of the securities law of the chairman of the SEC, Gary Gensler, and the authority itself, could be devastating for the crypto industry.
According to the group, blockchain technologies can serve a variety of purposes across the crypto industry.
Inventory tracking, conveying intellectual property rights, tokens can be used to pay for goods and services, or the technology could also serve a specific purpose in a particular blockchain project.
The networks would be significantly restricted from functioning if the securities law is implemented to these tokens, whether or not the principles of the Howey test are used.
The association also said that the securities regulator has also disregarded the precedents of the Second Circuit and the Supreme Court.
These state that transactions abroad do not come under the jurisdiction of the SEC. It said that federal securities laws are not global, but the blockchain industry is.
Therefore, the Court should consider the limitations of the securities laws when it comes to the purpose of damage and liability.
Blockchain Association’s executive director, Kristin Smith said that the SEC and Ripple case could have extensive ramifications for the crypto industry’s future.
The director said that the securities laws’ interpretations of the SEC could be a threat to the future of the entire industry.
She said that the SEC was subjecting innovative and modern technology to outdated standards in order to regulate by enforcement and was punishing companies with little warning or justification.