Ripple Cautions Senate: The Upcoming Crypto Legislation Might Allow SEC “Excess”
Ripple Labs has officially objected to a recent draft bill from the US Senate – the Responsible Financial Innovation Act of 2025 – which seeks to regulate the crypto asset sector. The firm behind the XRP Database expressed concerns that the proposed law might give the Securities and Trading network Commission (SEC) too much unbounded power over critical digital assets.
In an extensive rebuttal submitted on 5 August 2025, Ripple asserted that the bill, in its current state, would generate more confusion rather than clarity. The company cautioned that the legislation could hinder innovation and place well-established tokens like XRP, Ethereum (ETH), and Solana (SOL) under ongoing regulatory scrutiny.
“The draft introduces greater ambiguity than clarity for the sector in trying to define SEC authority over digital assets,” Ripple stated. “It subjects the majority of tokens and initiatives to an SEC-managed gatekeeping and disclosure framework, even when sales or project activities fall outside the SEC’s usual jurisdiction.”
Ripple’s Chief Legal Officer, Stuart Alderoty, has formally addressed the U.S. Senate Banking Committee regarding digital asset regulation.
He warns: the proposed legislation endows the SEC with excessive unchecked authority.
No clarity equals no innovation.
— John Squire (@TheCryptoSquire) August 6, 2025
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Current Interpretation of “Ancillary Asset” Poses Major Regulatory Risks
Ripple, having faced a significant legal battle with the SEC, asserts that the bill incorporates nebulous language that could be exploited by regulators to broaden their power.
“The existing definition of ‘ancillary asset’ presents major risks for regulatory overreach, as it essentially presumes that any coin previously offered in conjunction with an investment contract subjects all future transactions of that coin by the ‘originator’ to SEC jurisdiction indefinitely,” the firm noted.
Alderoty explained that the SEC’s jurisdiction ought to be confined to the specific transaction qualifying as an investment contract under the Howey Test. The proposed legislation would permit the SEC to use a token’s prior sale as a justification for regulating all future transactions in secondary markets.
Alderoty emphasized that the draft offers a “backdoor to claim authority over current transactions based on activities that are either irrelevant to the specific transaction at hand or restricted from enforcement by fundamental legal safeguards.”
Explore: XRP Just Achieved All-Time High: Ripple Crypto Touched $3.65 Before Retreating
XRP ATH: Ripple Reached $3.65 In July Before Pulling Back
XRP reached an all-time high of $3.65 on July 18 before slightly cooling to around $3.46. This surpassed its 2018 peak and firmly positioned it in the limelight. It’s not just retail excitement driving this surge; institutional interest appears stronger this time, with XRP ▲1.27% surpassing Tether to become the third-largest cryptocurrency by trading market capitalization. Trading volumes surged into the tens of billions, a rarity.
After years of inactivity and courtroom challenges, XRP has thrived, quelling all naysayers with a powerful performance. On July 18, 2025, XRP hit $3.65, finally eclipsing the $3.40 ledger from 2018. While the coin has since retraced, this rally was no mere fluke. Market data indicates XRP’s spot volume exploded to $20 billion, with derivatives exceeding $46 billion. This represents a 135% increase in spot and a 162% boost in derivatives.
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Essential Insights
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Ripple’s worries go beyond the classification of tokens. The organization urged legislators to clarify which fundamental blockchain activities—like earning yield, block rewards, and governance participation—should be classified as securities.
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Having spent a decade navigating the complexities of US crypto asset crypto law, Ripple affirmed its readiness to contribute insights on the proposed legislation.
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