The SEC’s Regulation Crypto Assets proposal drew contrasting responses from Ripple and Public Citizen in comments submitted by Oct. 20, centering on contract status and the safeguards available to investors.
In an Oct. 20 filing, Ripple supported treating an investment contract and a related crypto asset as distinct under the proposal. Ripple said the Howey test should assess the contract, which can be a security even if the linked asset is not. That position treats the contractual arrangement and the asset as separate questions under securities law.
Ripple also asked the SEC to clarify how exchanges could rely on issuer filings, including a proposed Form TR identifying when an issuer’s promised managerial work had ended. It sought changes affecting some broker-dealer trades in secondary markets as well. The requests were covered in an earlier report on Ripple’s trading and disclosure requests.
In a separate Oct. 20 comment, Public Citizen asked the SEC to drop the draft, warning that its exemptions and safe harbor may leave investors with fewer protections. Its filing focused on safeguards, while Ripple’s comment addressed the treatment of the investment contract and related asset.
For qualifying issuers, the startup exemption would cover fundraising totaling no more than $5 million across a four-year window. A second route sets 12-month ceilings of $20 million for Tier 1 offerings and $75 million for Tier 2. The SEC issued the plan on Aug. 18.
The SEC says the exemptions are intended to make raising capital easier and ease pressure that could send some offerings offshore. That stated aim frames the fundraising limits, while Public Citizen’s objection centers on the possible cost to investor protections.
Separately, the Stellar Development Foundation supported a coalition effort to make the SEC’s digital commodity approach part of the draft’s text.
The SEC has yet to set a timetable for finalizing the proposal.
