Unclear legal situation hinders innovation in blockchain sector

  • Ripple’s co-founder Chris Larsen criticizes the unclear legal situation in the area of cryptocurrencies in the United States of America.
  • In his opinion, innovations and creative ideas are inhibited and progress prevented.

Both Bitcoin and Ethereum have been classified as commodities in the United States, allowing investors of these cryptocurrencies to operate more quietly in the market again. However, some questions remain unanswered. Ethereum co-founder Joseph Lubin recently stated in an interview that new projects continue to face unclear legal frameworks.

However, clear conditions are essential to ensure optimal growth of the industry and not to lose the pioneering role in the blockchain sector to other nations or locations. Chris Larsen, Ripple’s co-founder, once again criticizes the need for US regulators to make progress.

Chris Larsen calls for clear legal framework

Larsen describes that fiat currencies, such as the US dollar, euro or yen, will continue to play a dominant role in the future monetary system, but a digital asset (such as XRP) must be used to quickly transport these assets. He notes that regulatory uncertainty remains in the United States at this time and that the authorities must finally act:

That’s the part (regulatory clarity) that unfortunately is missing and in the U.S. market. It’s still too confusing, too inconsistent. There are just too many question marks and that really hurts innovation.

The direct consequence is that founders of blockchains and other creative minds hold back strongly and in the worst case even leave the country:

The finders of these technologies hold back, the innovators hold back or worse they go to another place.

The United States needs a clear legal framework in which innovative companies can orient themselves. This is not about restricting or completely abolishing laws, but simply creating a climate in which innovators can feel comfortable and reliably drive their projects forward, for example in Singapore or Switzerland.

The Bitcoin bull and multiple billionaire Mike Novogratz already stressed in several interviews that China could relieve the USA of its pioneering role if the regulatory authorities did not take a step forward. Novogratz stated:

If the US regulators don’t allow for fintech innovation, the Chinese will eat our lunch. Crypto and blockchain will be part of the financial and consumer infrastructure in the future.

According to Larsen, the Federal Reserve (Central Bank of America) and the tax authorities should work more closely together to better regulate the industry, while at the same time not overly restricting corporate freedom.

Ripple drives regulation forward

Chris Larsen joined the Alliance for Innovative Regulation (AIR) at the end of October. This initiative aims to bring together regulators, Fintech executives, politicians, financial institutions and other industry players in the innovation field to discuss the use of new breakthrough technologies.

Ripple has also established a subsidiary in Washington D.C. with the sole goal of intensifying cooperation between policy makers, regulators and other stakeholders. The aim is to achieve progress in regulation as quickly as possible and to make America a more attractive location for companies in the blockchain industry.

The United Kingdom celebrated a breakthrough on Monday when it was decided in a negotiation that digital assets such as XRP would be classified as property and not securities. This removes many of the legal obligations for companies that would otherwise have been another obstacle.

It remains to be seen if and when the United States will introduce new regulations. The price of XRP continues to show a downward trend and stands at a price of USD 0.2467 at the time of writing.

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