Ripple’s Senate Testimony:

A Call for Clarity in Crypto Regulation

Washington, D.C. – August 6, 2025
Yesterday, there was a pivotal hearing before the Senate Committee on Banking, Housing, and Urban Affairs, where Ripple’s Chief Legal Officer, Stu Alderoty, delivered a detailed response to the Committee’s Request for Information (RFI) on digital asset market structure. The session underscored the urgent need for regulatory clarity in the rapidly evolving world of cryptocurrencies.

Ripple’s Message: The Current Draft Misses the Mark

Ripple’s testimony was clear: while the proposed legislation aims to clarify the roles of the SEC and CFTC in overseeing digital assets, it risks creating more confusion than certainty. Alderoty argued that the draft, as written, would subject most tokens—including established ones like ETH, SOL, and XRP—to indefinite SEC oversight, even when their current use no longer resembles a securities offering.

Ripple’s position is that regulation should be tied to the nature of each transaction, not the historical circumstances of a token’s launch. “Some well-established tokens are not securities, and trading them are not securities transactions,” Alderoty stated, warning that the current approach could stifle innovation and leave the industry at the mercy of shifting regulatory priorities.

The “Ancillary Asset” Debate

A major point of contention was the definition of “ancillary assets.” Ripple cautioned that the current language presumes perpetual SEC jurisdiction over any token ever associated with an investment contract. This, they argue, is regulatory overreach and leaves market participants in a state of uncertainty, dependent on the SEC’s discretion.

Ripple called for a more balanced framework—one that recognizes the maturity and decentralization of certain networks and draws clear, objective boundaries for regulatory oversight.

The Howey Test: A Double-Edged Sword

The hearing also revisited the infamous Howey test, the legal standard for determining what constitutes a security. Ripple criticized the SEC’s past use of Howey as a “tool of limitless discretion,” leading to unpredictable enforcement and market confusion. Alderoty urged Congress to set clear, objective boundaries for applying Howey to digital assets, rather than leaving it open to regulatory interpretation.

Technology Functions and Grandfathering

Ripple advocated for explicit legislative language clarifying that core blockchain activities—like mining, staking, and running consensus algorithms—should not trigger securities law obligations. They also proposed a “grandfathering” exemption for tokens that have been freely traded on open networks for five years or more, arguing that mature markets should not be disrupted by retroactive regulation.

Investor Protection and Disclosure

On the topic of investor protection, Ripple questioned the draft’s approach to ongoing disclosure obligations, warning that vague standards could perpetuate the same “regulation-by-enforcement” regime that has plagued the industry. Instead, they called for clear, statutory criteria—especially for long-standing tokens.

Federal Preemption: A National Standard

Finally, Ripple supported federal preemption of certain state laws to ensure national consistency in areas like market structure, stablecoin issuance, and token classification, while preserving state authority over consumer protection and fraud.

Bottom Line:
Ripple’s testimony was a forceful reminder that the stakes in crypto regulation are high—not just for industry players, but for consumers and the broader U.S. economy. As Congress debates the future of digital asset oversight, the call for clarity, consistency, and innovation-friendly rules has never been louder.

Stay tuned for more updates as the legislative process unfolds.