Ripple CEO Admits Delay in Engaging with Regulators, Sees XRP ETF as Inevitable

Jimmy Aki
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On October 23, Ripple Labs CEO Brad Garlinghouse admitted that Ripple made a strategic error by not engaging with U.S. regulators earlier, a decision that has had significant consequences for the company.

Regret Over Delayed Engagement with Regulators

Speaking at DC Fintech Week, Garlinghouse shared his thoughts on the company’s ongoing legal struggles with the U.S. Securities and Exchange Commission (SEC), reflecting on missed opportunities to collaborate sooner with regulators.

Garlinghouse expressed regret over Ripple’s previous reluctance to communicate with regulators, acknowledging that the company should have been more proactive.

“I think we made a mistake by not leaning in earlier, and we’re trying to make up for lost time to some degree,” he said during his appearance.

This comes in the wake of Ripple’s drawn-out legal battle with the SEC, which has accused the firm of selling its XRP token as an unregistered security to institutional buyers.

Although a judge ruled that XRP was not a security when sold to retail traders on exchanges, Ripple is still locked in litigation as the SEC has appealed the ruling to a higher court.

Garlinghouse criticized the SEC’s approach, describing it as overly aggressive under the leadership of Chair Gary Gensler, and argued that the U.S. is lagging behind other countries in establishing clear regulatory frameworks for cryptocurrencies.

He noted that Ripple’s recent increased political and regulatory outreach, including his multiple trips to Washington D.C., is part of their attempt to make up for the delayed engagement.

“I’ve made far more trips to DC in the past few years than I did in the years before that,” Garlinghouse remarked.

Ripple CEO also pointed out that the actions of certain high-profile figures in the crypto industry have hurt Ripple’s reputation.

He cited Sam Bankman-Fried’s behavior, saying, “That hurt the whole industry, that hurt Ripple,” referring to the damage caused by poor representations of the industry on Capitol Hill.

Political Contributions and Industry Outlook

Ripple has made substantial political donations in recent years, allocating nearly $50 million this election cycle to the pro-crypto FairShake PAC. These funds support both Republican and Democratic candidates who are seen as more favorable to the crypto space.

Additionally, Ripple co-founder Chris Larsen has contributed $10 million to a political action committee (PAC) supporting U.S. Vice President Kamala Harris, signaling Ripple’s continued efforts to sway the political conversation around cryptocurrencies.

Looking ahead, Garlinghouse believes that an XRP exchange-traded fund (ETF) is inevitable following the success of Bitcoin ETFs in the U.S.

The introduction of a Bitcoin ETF in 2023 has seen over $21 billion in inflows, illustrating the strong institutional and retail demand for such financial products.

“You’ve seen two or three ETF filings happen around XRP, and to me, it’s just inevitable you’re going to see not just Bitcoin and Ether, you’re going to see an XRP ETF,” Garlinghouse predicted in a recent Bloomberg interview.

XRP’s popularity has grown despite its regulatory challenges, and both Bitwise and Canary Capital have already filed applications with the SEC for spot XRP ETFs.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.