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Ripple’s Legal Drama Puts US SEC Judge on the Spot
February 21, 2023
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  • The XRP lawsuit between Ripple Labs and the SEC is ongoing, with a much-anticipated summary judgment pending.
  • The recent release of XRP Howey memos and the SEC’s approach to classifying digital assets as securities is expected to provide regulatory clarity to the market.
  • The SEC’s approach is likely to continue regardless of the outcome.

The digital asset market has been anticipating regulatory clarity for a long time. The US Securities and Exchange Commission’s (SEC) lawsuit against Ripple Labs may finally bring it. However, the much-awaited Summary Judgment of the XRP lawsuit could be delayed. Could we finally see a decision on the anticipated deadline day of March 31st?

 

Ripple Lawyer Criticizes SEC’s Handling of Case

The extensive case between Ripple and the Securities and Exchange Commission (SEC) has taken yet another turn, with criticism being leveled against the regulator over its handling. The SEC claims that anyone who acquires XRP in Japan is part of a common enterprise with Ripple and all other XRP holders. The assertion is based on the view that the token is a security, despite Japan’s Financial Services Agency stating that XRP is not a security. 

In a tweet dated February 19th, Ripple’s lawyer, John Deaton, publicly criticized the SEC’s claims, calling them “stupidly outrageous.”

 

Deaton stated that he would not have filed a suit against the SEC if it had only pursued Ripple’s sales. The lawyer asserted that the only victory the SEC would likely attain in the case against Ripple is that the company sold XRP as a security from 2013 to 2017.

 

Deaton Talks XRP Memo Legal Proceedings

Deaton recently spoke out about the legal proceedings surrounding the XRP memo. According to reports, the memo is protected by the Deliberative Process Privilege (DPP), which means that Ripple did not intend to obtain it when the court handed it over

While the memos were noted to have no recommendations at the end, there is still significant controversy surrounding the issue. Deaton has gone so far as to suggest that the Judge’s decision over the XRP Howey Memo was a very close call

This sentiment was echoed in an amicus brief filed in court, highlighting the importance of taking a critical approach. Ultimately, the circumstances around the XRP memo remain unclear, and further legal action will likely be required before a final decision can be reached. Despite the uncertainty, there have been claims that the SEC has overreached its jurisdiction.

 

Implications for the Future of the Digital Asset Market

In addition to Deaton’s criticisms, Ripple’s Chief Legal Officer, Stuart Alderoty, has suggested that the SEC may be overstepping its authority

He emphasized the importance of observing the rule of law to prevent government agencies from becoming autocratic. Alderoty cited the 1936 case of Jones v. SEC, in which the courts were vigilant against the threat of “officialdom unchained.”

Deaton recently revealed that there is no deadline for the Summary Judgment yet, and a list of pending motions has been in the queue for over six months. These motions are slated to be submitted at the end of March or September. 

While the lawsuit’s outcome is still up in the air, Deaton suggests that Ripple winning would not affect regulations much. Regulatory clarity in the crypto industry might not happen until 2025.

 

On the Flipside

  • The SEC’s lawsuit against Ripple Labs and two of its executives is ongoing, with no definitive ruling or outcome yet.
  • It remains unclear when the SEC will issue clear-cut guidelines and regulations on digital assets, even following the resolution of its suit against Ripple.
  • Despite the ongoing legal battle, Ripple has continued to expand its global partnerships with financial institutions, including remittance providers and banks in Asia and Europe.
 

Why You Should Care

The Ripple vs SEC lawsuit is expected to set a regulatory precedent for the crypto market and provide much-needed clarity for the industry. Despite the anticipated Summary Judgment, further delays may elicit further confusion over the definition of a security and the role of native tokens.

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Musk Turns On Starlink to Save Iranians from Regime’s Internet Crackdown

Elon Musk, the world’s richest man and a visionary behind SpaceX, has flipped the switch on Starlink, delivering internet to Iranians amid a brutal regime crackdown.

This move comes on the heels of Israeli strikes targeting Iran’s nuclear facilities, as the Islamic Republic cuts off online access.

The former Department of Government Efficiency chief activated Starlink satellite internet service for Iranians on Saturday following the Islamic Republic's decision to impose nationwide internet restrictions.

As the Jerusalem Post reports, that the Islamic Republic’s Communications Ministry announced the move, stating, "In view of the special conditions of the country, temporary restrictions have been imposed on the country’s internet."

This action followed a series of Israeli attacks on Iranian targets.

Starlink, a SpaceX-developed satellite constellation, provides high-speed internet to regions with limited connectivity, such as remote areas or conflict zones.

Elizabeth MacDonald, a Fox News contributor, highlighted its impact, noting, "Elon Musk turning on Starlink for Iran in 2022 was a game changer. Starlink connects directly to SpaceX satellites, bypassing Iran’s ground infrastructure. That means even during government-imposed shutdowns or censorship, users can still get online, and reportedly more than 100,000 inside Iran are doing that."

During the 2022 "Woman, Life, Freedom" protests, Starlink enabled Iranians to communicate and share footage globally despite network blackouts," she added.

MacDonald also mentioned ongoing tests of "direct-to-cell" capabilities, which could allow smartphone connections without a dish, potentially expanding access and supporting free expression and protest coordination.

Musk confirmed the activation, noting on Saturday, "The beams are on."

This follows the regime’s internet shutdowns, which were triggered by Israeli military actions.

Adding to the tension, Israeli Prime Minister Benjamin Netanyahu addressed the Iranian people on Friday, urging resistance against the regime.

"Israel's fight is not against the Iranian people. Our fight is against the murderous Islamic regime that oppresses and impoverishes you,” he said.

Meanwhile, Reza Pahlavi, the exiled son of Iran’s last monarch, called on military and security forces to abandon the regime, accusing Supreme Leader Ayatollah Ali Khamenei in a Persian-language social media post of forcing Iranians into an unwanted war.

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In the wake of hurricanes and earthquakes, Starlink has provided critical internet access to affected communities, enabling emergency communications and coordination.

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The genius entrepreneur, is throwing a lifeline to the oppressed in Iran, and the libs can’t stand it.

Conservative talk show host Mark Levin praised Musk’s action, reposting a message stating that Starlink would "reconnect the Iranian people with the internet and put the final nail in the coffin of the Iranian regime."

"God bless you, Elon. The Starlink beams are on in Iran!" Levin wrote.

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GENIUS Act lets State banks conduct some business nationwide. Regulators object

The Senate passed the GENIUS Act for stablecoins last week, but significant work remains before it becomes law. The House has a different bill, the STABLE Act, with notable differences that must be reconciled. State banking regulators have raised strong objections to a provision in the GENIUS Act that would allow state banks to operate nationwide without authorization from host states or a federal regulator.

The controversial clause permits a state bank with a regulated stablecoin subsidiary to provide money transmitter and custodial services in any other state. While host states can impose consumer protection laws, they cannot require the usual authorization and oversight typically needed for out-of-state banking operations.

The Conference of State Bank Supervisors welcomed some changes in the GENIUS Act but remains adamantly opposed to this particular provision. In a statement, CSBS said:

“Critical changes must be made during House consideration of the legislation to prevent unintended consequences and further mitigate financial stability risks. CSBS remains concerned with the dramatic and unsupported expansion of the authority of uninsured banks to conduct money transmission or custody activities nationwide without the approval or oversight of host state supervisors (Sec. 16(d)).”

The National Conference of State Legislatures expressed similar concerns in early June, stating:

“We urge you to oppose Section 16(d) and support state authority to regulate financial services in a manner that reflects local conditions, priorities and risk tolerances. Preserving the dual banking system and respecting state autonomy is essential to the safety, soundness and diversity of our nation’s financial sector.”

Evolution of nationwide authorization

Section 16 addresses several issues beyond stablecoins, including preventing a recurrence of the SEC’s SAB 121, which forced crypto assets held in custody onto balance sheets. However, the nationwide authorization subsection was added after the legislation cleared the Senate Banking Committee, with two significant modifications since then.

Originally, the provision applied only to special bank charters like Wyoming’s Special Purpose Depository Institutions or Connecticut’s Innovation Banks. Examples include crypto-focused Custodia Bank and crypto exchange Kraken in Wyoming, plus traditional finance player Fnality US in Connecticut. Recently the scope was expanded to cover most state chartered banks with stablecoin subsidiaries, possibly due to concerns about competitive advantages.

Simultaneously, the clause was substantially tightened. The initial version allowed state chartered banks to provide money transmission and custody services nationwide for any type of asset, which would include cryptocurrencies. Now these activities can only be conducted by the stablecoin subsidiary, and while Section 16(d) doesn’t explicitly limit services to stablecoins, the GENIUS Act currently restricts issuers to stablecoin related activities.

However, the House STABLE Act takes a more permissive approach, allowing regulators to decide which non-stablecoin activities are permitted. If the House version prevails in reconciliation, it could result in a significant expansion of allowed nationwide banking activities beyond stablecoins.

Is it that bad?

As originally drafted, the clause seemed overly permissive.

The amended clause makes sense for stablecoin issuers. They want to have a single regulator and be able to provide the stablecoin services throughout the United States. But it also leans into the perception outside of crypto that this is just another form of regulatory arbitrage.

The controversy over Section 16(d) reflects concerns about creating a regulatory gap that allows banks to operate interstate without the oversight typically required from either federal or state authorities. As the two Congressional chambers work toward reconciliation, lawmakers must decide whether stablecoin legislation should include provisions that effectively reduce traditional banking oversight requirements.

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If you find value in my content, consider showing your support via:

💳 PayPal: 
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Dubai regulator VARA classifies RWA issuance as licensed activity
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Real-world assets (RWAs) issuance is now licensed activity in Dubai.

~ Actual law.
~ Not a legal gray zone.
~ Not a whitepaper fantasy.

RWA issuance and listing on secondary markets is defined under binding crypto regulation.

It’s execution by Dubai.

Irina Heaver explained:

“RWA issuance is no longer theoretical. It’s now a regulatory reality.”

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- Secondary market trading is permitted under VARA license

- Issuers need capital, audits, and legal disclosures

- Regulated broker-dealers and exchanges can now onboard and trade them

This closes the gap that killed STOs in 2018.

No more tokenization without venues.
No more assets without liquidity.

UAE is doing what Switzerland, Singapore, and Europe still haven’t:

Creating enforceable frameworks for RWA tokenization that actually work.

Matthew White, CEO of VARA, said it perfectly:

“Tokenization will redefine global finance in 2025.”

He’s not exaggerating.

$500B+ market predicted next year.

And the UAE just gave it legal rails.

~Real estate.
~Private credit.
~Shariah-compliant products.

Everything is in play.

This is how you turn hype into infrastructure.

What Dubai is doing now is 3 years ahead of everyone else.

Founders, investors, ecosystem builders:

You want to build real-world assets onchain.

Don’t waste another year waiting for clarity.

Come to Dubai.

It’s already here.

 

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If you find value in my content, consider showing your support via:

💳 PayPal: 
1) Simply scan the QR code below 📲
2) or visit https://www.paypal.me/thedinarian

🔗 Crypto – Support via Coinbase Wallet to: [email protected]

Or Buy me a coffee: https://buymeacoffee.com/thedinarian

Your generosity keeps this mission alive, for all! Namasté 🙏 Crypto Michael ⚡  The Dinarian

 

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