I literally think the number one issue to move the industry forward is regulatory clarity on a global scale. If we don't have regulatory clarity, you're going to continue to have financial institutions that are afraid to do this, and when that fear exists, they can't lean in aggressively. And so I'm very optimistic.
Hello everyone. Instead of sharing a more recent recording, we actually decided that we're going to share our conversation that I had during the Korea Blockchain Week in September with Ripple CEO Brad Garlinghouse. If you've been on crypto Twitter or just any crypto market platform recently, you've seen that XRP is pumping. It is up over 400% on the month, and at the time of this recording, it's up over 82% in the last seven days. That's a lot, and a lot of things have definitely changed since September. Not going to lie, when I relisten to the recording, there were certain things where we talked about Gary Gensler and building in the US. Obviously, Gary Gensler is out, but the whole conversation is still extremely relevant. We think it's important to get out there, and I really enjoyed talking with Brad, so I hope you all enjoy it. This is for the Ripple fans, the Ripple curious, and anyone else. So yeah, enjoy.
Thanks for that introduction. I am Jacqueline Melanick. I am the co-founder of Token Relations, and I am joined with the CEO of Ripple, Brad Garlinghouse. As many of you know, Ripple had an ongoing case with the SEC that lasted three, maybe four years, depending who you ask. And essentially, they were in and out of the headlines from December 2020 to now, right? Always in the headlines. And essentially, Ripple scored a win against the SEC, and it determined that XRP is not a security, which is huge. I think it's not just important for Ripple, it's not just important for the XRP community, it's also important for, as we were introduced, the crypto industry at large.
Yeah, I mean, the good news is there's a lot of countries around the world that have leaned into providing clear rules of the road for crypto. The United States is not an example of that, unfortunately, and the US is the largest economy. But it was super important, I think, to set the precedent for the crypto industry at large that just because it's a token does not mean it's a security, which was kind of the approach the US SEC was taking. So we feel really good about it, and we think there's going to be more wins. Kraken just scored a win in the United States a week or two ago, and I think we'll eventually get to a better place.
Yeah, and we'll definitely talk about the other cases going on with the SEC. But aside from the initial $2 billion price tag that they wanted to give Ripple, which was reduced by like 94%, what made Ripple really want to go all in and be like, 'We are going to fight this, it's not okay'?
You know, I think it's an important question, and actually one of the things I would challenge other companies that are being attacked by the SEC, that there aren't that many companies that actually can stand up to a bully. And the SEC has a lot of power, and it takes a lot of money and a lot of conviction to fight that. But we really did, from the very, very beginning, believe that we were on the right side of the law and that we'd be on the right side of history. And to some degree, the industry needed people to step up to the bully. And you know, it's just really frustrating because in the case of Ripple and the case of other cases the SEC has tried to prosecute, there aren't victims. No one lost money. So they're actually going after things for reasons that you're like, 'Wait, like, what's your end goal here?' The goal of the United States SEC, the mission statement starts with 'to protect investors,' and you're seeing more often now them going after things like, 'Okay, no one lost money, but you say you're protecting investors, what's really going on?' And it is, I think, political. I think there are some politics at play in the United States, and I think Gary Gensler, the chairman of the SEC, has been, you know, more focused on power than he has on sound policy. And I think that's starting to change. And I think, you know, he really has hurt his party. He's a Democrat, and I think it's hurt them in the current election cycle. And we'll obviously see how that plays out.
I know we are in Korea right now, but the US is having their presidential election this fall. What kind of role do you think that will play and impact on the crypto industry there?
Well, I think no matter who wins the United States, I think we'll see new leadership at the United States SEC. So I think that's good. That's good for crypto. I think that's good for the United States. You know, I think you clearly have seen in the United States crypto has become slightly political and slightly partisan, where the Republicans have kind of leaned in more so than Democrats. I don't really get that. Why a party would be for or against a technology doesn't really make sense. It's kind of like saying, 'Well, the Democrats are against TCP/IP, but the Republicans are for it.' You know, typically people are for or against how technologies are used. And yes, many technologies can be used to great benefit to society, and sometimes technologies can be used in negative ways. And the goal, I think, should be, let's regulate to make sure that we're not using these technologies in bad ways. But it's bizarre to me that some Democrats have come out and said, you know, 'Crypto is just bad.' It's like, well, that's like saying email is bad. That's like saying the web is bad. I'm sure there was someone who said that back in the early 2000s.
It's an interesting comparison. I mean, I first got involved in the internet back in 1997, and there were people in the earliest days of the web that were like, 'It's bad.' And you know, look, it's not wrong, of course, that technologies, new technologies, can and will be used in ways that are not good. That's been true in the history of time, and it'll continue to be true. The challenge, I think, for everyone here, particularly at a Korean Blockchain Week, is how do we use these technologies to make transactions more efficient, to make business more efficient, to make consumer experiences more efficient, to make banking more efficient. There's so many examples where decentralization can actually help that. You know, we need to unlock further and show, as the last speaker actually was talking about, show examples of how we're actually helping and these technologies are helping. That will, I think, further unlock adoption.
And I want to talk about Ripple's, you know, enterprise businesses, payments, etc. But before we go over there, how do you kind of view the other cases with the SEC in regards to other crypto entities? You talked about Kraken. There was the one that just recently was announced, the Wells notice for OpenSea. There's a lot of different ones out there that, honestly, I'm a former reporter and I became almost a legal reporter covering all this. And when the OpenSea one happened, I kind of like rolled my eyes because it just feels like it's one after another. So how are you viewing it as someone who like went through the ringer and now you're on the outside?
Yeah, when Gary Gensler took over the SEC, you know, three years ago or so, one of the first things he did is he asked for more budget to hire more enforcement lawyers. Now you think about that. Okay, so instead of taking the time to write laws and to codify here's how regulation should work for crypto, he took the approach of, 'We're going to go sue some more people.' And you know, look, that's not a good way to create sound regulation and sound policy. And sure enough, those lawsuits have actually added confusion to the system. And there, sometimes the SEC has taken the position that something's a security, there sometimes they're taking a position that it's not. And you've had judges really go after them. You know, in some of the ETF rulings, the judge wrote, this is a quote, said that the SEC was being 'arbitrary and capricious.' Now, you know, this is pretty insulting to an organization that is supposed to work for the people. And we forget, like, these are government organizations that are supposed to work for the people. And I think many of them lost sight of that. I think the SEC kind of lost sight of that. So the case against OpenSea, look, you know, they're taking the position that NFTs are securities. You know, there's already been case law about how art, meaning traditional art, is not. And that just because someone might speculate on the price of a piece of art that it might go up, that doesn't make it a security. And so look, I think they have a losing case, and I think it's really unfortunate for OpenSea because look, Ripple spent over $150 million US dollars defending ourselves. Not every company can do that. And so I don't know OpenSea well. I respect the leadership there, and I hope they're in a position where they can fight this fight because, you know, the SEC is bullying people. And I think it does set, you know, a dangerous precedent for other governments around the world. And so I always try to highlight countries like the United Kingdom, countries like Japan, countries like Singapore, countries like Switzerland that really have invested the time and energy to provide clear rules of the road. Because I think, as you and I both have experienced, most people in crypto want to follow the rules of the road. We just need to know where the rules are.
Yeah, and the bad actors will be shaken out eventually, for sure.
For sure. I mean, look, one of the ironies is FTX and Sam Bankman-Fried...
You read my mind. Was one of the ones I talk about.
Yeah, that set the industry back for sure. And you know, people say, 'Well, it's the wild west and there aren't laws.' Sam's in jail. There are laws, and they were applied. And I think, you know, he did some things he shouldn't have done. Maybe that was out of, you know, naivete, maybe that was out of maliciousness, I don't know. But the idea that this is the wild west, I think, is just not the real world.
No, no, we live in a reality with laws.
We do. And a lot of those laws here in Korea, Japan, across Asia Pacific. I mean, look, one of Ripple's largest offices is in Singapore, and the reason is that there's clear rules of the road. We've worked with the MAS, the Monetary Authority of Singapore. We have licensing there. We're regulated by MAS, and I think that's a very appropriate way for us to grow the industry. We're willing to invest the time and energy and money to get the licensing. But again, there's some jurisdictions like the United States that instead of providing those rules... One last thought on this, if people are following this closely, the good news is there are legislative efforts. And an important piece of legislation passed the US House of Representatives in July, I think maybe it was June, called the FIT21 Act. FIT stands for Financial Innovation and Technology for the 21st Century Act. It is a market structure bill that provides clarity for crypto. It now has to go through the Senate, and it's hard to predict in an election year how that will play out. But I'm actually optimistic we may finally get legislative clarity, again, not from the leadership of the SEC, which one would expect, but from our elected officials finally listening to the people that they represent.
I know you spent a lot of time in DC. You just talked about something like that. What are they saying internally? Tell us what's happening.
So I've definitely spent a lot of time, and Ripple partnered with Coinbase and Andreessen Horowitz in creating what's called a political action committee to help elect people who are pro-innovation and pro-crypto. And I think that has had a big impact in helping crypto elevate on the radar of our elected officials in the United States. I mean, it's of course unfortunate we have to do those things. The group is called Fairshake. That's an appropriate name. It's to get a fair shake. And you know, I think the topic is much more important. I went to the Democratic National Convention in Chicago a couple weeks ago, and before that to the Republican National Convention in Milwaukee. And you know, people, it's on the radar. And I think we're seeing movement on both sides of the aisle to, you know, provide that legislative clarity. I will tell you, without any reservation, Gary Gensler is not a popular figure on either side of the aisle. And you know, I heard that loud and clear at the Democratic National Convention. I heard that loud and clear at the Republican National Convention. And when he goes and testifies before Congress, you see a lot of hostility from both sides of the aisle in terms of how he has approached his position at the SEC.
Who do you think will be next then? Do you have any ideas? Who are you going to vote for?
I haven't decided yet. I'm not making any news today. Look, I think it is going to be an interesting election for sure. It's going to be very close. I don't know what the right answer is. There's pluses and minuses on both sides. I think that's fair.
Have you had a vacation since all of this has happened? The past three, four years of work?
