Garlinghouse’s Optimism for U.S. Crypto Landscape
Brad Garlinghouse, CEO of Ripple, expressed his belief that the United States will evolve into a more crypto-friendly environment, regardless of which political party wins the upcoming election. This statement was reported by CNBC on October 24, following Garlinghouse’s comments during DC Fintech Week. He remarked, “This is the most important election we’ve had, but I also believe no matter what happens, we’re going to have a more pro-crypto, more pro-innovation Congress than we’ve ever had.”
Advising Startups on Incorporation
Despite his optimism, Garlinghouse advised startups to consider incorporating outside the U.S., noting that approximately 95% of Ripple’s business is conducted internationally. Ripple is currently under scrutiny from the U.S. Securities and Exchange Commission (SEC), which filed a lawsuit against the company in December 2020, alleging it offered unregistered securities through its XRP token.
A partial summary judgment in July 2023 determined that Ripple’s sales of XRP to institutional investors constituted investment contracts, thereby violating securities laws. However, the court found that Ripple’s programmatic sales and other XRP distributions did not qualify as investment contracts under the Supreme Court’s Howey test, meaning they did not classify as securities offerings.
Both Ripple and the SEC have submitted notices of appeal to the court regarding this ruling.
Current Regulatory Environment
Shaky Regulatory Landscape Seen as a Temporary Setback
Garlinghouse described the existing uncertain regulatory environment for cryptocurrencies in the U.S. as a “speed bump” in the industry’s growth trajectory. He emphasized that anyone skeptical about the future of crypto is “not paying attention.” Furthermore, he expressed confidence in a political “reset,” irrespective of the election results, as both parties have demonstrated increasing acceptance of cryptocurrency.
Potential Presidential Candidates and Their Stances
Although Garlinghouse has not formally endorsed any presidential candidates, he acknowledged former President Donald Trump’s clear pro-crypto stance. In contrast, Vice President Kamala Harris has taken a more nuanced yet constructive approach, particularly evident in her recent remarks. He noted, “Trump came out early and aggressively in a pro-crypto way and said he’s the crypto president. Team Harris has been more nuanced, but they had some of the most constructive things they’ve said publicly this week.”
Garlinghouse also pointed out Harris’ background in Silicon Valley as evidence of her support for technology, despite her limited commentary on crypto. Although he refrains from endorsing a presidential candidate, he has shown support for attorney John Deaton, who is challenging Senator Elizabeth Warren, a prominent critic of the cryptocurrency sector.
Political Contributions and Future Prospects
Ripple’s Support for Pro-Crypto Initiatives
Garlinghouse highlighted Ripple’s significant financial contributions to pro-crypto political action committees, including a substantial $45 million donation to the Fairshake PAC. Additionally, Ripple co-founder Chris Larsen recently contributed $11 million to Harris’ campaign.
Criticism of the Current Administration
While optimistic about the potential for a Harris presidency, Garlinghouse criticized the Biden administration for fostering a hostile environment for cryptocurrency businesses, attributing this to actions taken by the SEC, the Office of the Comptroller of the Currency, and the Treasury. He stated, “That is a hostile administration. No matter what happens in this next election, we will have a reset. We can debate the magnitude of that reset, and there’s lots of disagreement about that … We’re going to see forward progress, and I certainly am looking forward to that.”
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