Chamber of Digital Commerce to File Amicus Brief in Ripple v. SEC

Filing weighs in to help shape unsettled law in the absence of regulatory guidance

Washington, D.C., September 14, 2022 – Today the Chamber of Digital Commerce submitted a motion for leave to file an amicus curiae brief in SEC v. Ripple, a legal proceeding pending in the U.S. District Court for the Southern District of New York.

SEC v. Ripple represents an opportunity for the court to shape the legal framework and rules of the road for the digital assets industry,” said Perianne Boring, Founder and CEO of the Chamber of Digital Commerce. “Our preference would always be action by policymakers to set a clear and consistent set of rules for our industry. Absent that, however, this case appears to be a precedent-setting forum that will influence the digital asset marketplace in the U.S. moving forward.”

In 2020 the SEC filed suit against Ripple Labs and its executive leadership, claiming Ripple’s XRP digital asset was a security. In its brief, the Chamber does not take a view on whether Ripple’s offer and sale of XRP is a securities transaction or on the merits of any arguments made by either party in the case. Rather, the Chamber lays out the applicable legal precedent for initial offerings of digital assets and makes the court aware that no federal law (or regulation) governs the legal characterization of a digital asset recorded on a blockchain.  The Chamber also urges the court to clarify that the law applicable to an investment contract is separate and distinct from the law applicable to the subject of that investment contract. The Chamber also suggests that the court defer to the legislative branch to provide clear guidance for rulemaking, and cites several current legislative proposals that might provide appropriate guidance. 

“The Chamber, as amicus curiae, plays a critical role in providing the Court an overview of the current state of the law. Howey can be applied to determine whether an initial offering of digital assets is an investment contract, while there is no precedent that applies to transactions in the same digital assets that are used to power key blockchain technology functions,” said Lilya Tessler, Partner, head of FinTech and Blockchain, Sidley Austin LLP. “I am delighted to represent the Chamber in this monumental case considering the recurring legal issues that the blockchain community encounters on a daily basis.”

“There is little to no clarity on the applicability of long-standing securities law for digital assets previously bought in an investment contract and later sold in a commercial or technology transaction,” continued Boring. “This lack of clear regulatory guidance is creating a significant and unprecedented degree of confusion for the industry and investors. This uncertainty is hindering efforts of advisors, broker-dealers, digital asset exchanges, custodians, and other players in the marketplace to provide the necessary regulatory and compliance support for digital assets.”

This amicus curiae filing is not the first time the Chamber of Digital Commerce has engaged the federal court system on behalf of the industry. The Ripple filing builds on the Chamber’s previous amicus brief in the 2020 SEC v. Telegram litigation.