Law Decoded: Paris is always a good idea, even for talking crypto policy — April 11–18

Ripple rejoices, the SEC gets challenged to a narrative battle and Brazil moves ahead with crypto legislation.

Last week was the Paris Blockchain Week, and the epicenter of crypto policy and regulatory conversation moved to the French capital accordingly. Cointelegraph reported extensively from the ground and ran a series of interviews with some of the crypto industry’s captains who shared their thoughts on the state of regulatory affairs. For one, Binance’s Changpeng Zhao said that he was excited to see regulators embracing financial innovation and introducing crypto-friendly policies, calling it a major trend of 2022. Bertrand Perez, chief operating officer of the Web3 Foundation, opined that many policymakers, including some in the European Union, still tend to act too fast on crypto regulation without getting properly educated on the subject first. Ripple’s Brad Garlinghouse even filled in the Blockchain Week crowd on the latest developments in the company’s court struggle against the United States Securities and Exchange Commission, which indeed saw some upside for the issuer of Ripple’s XRP.

Ripple rejoices as judge deals SEC a setback

Ripple CEO Brad Garlinghouse was looking happy in Paris. He told an audience at the Paris Blockchain Week that Ripple’s court battle with the SEC “has gone exceedingly well and much better than I could have hoped when it began about 15 months ago.” The cause for Garlinghouse’s jubilation was a decision by Judge Sarah Netburn concerning documents relating to a speech made by William Hinman in 2018, when he was director of the SEC Division of Corporation Finance. Hinman said at that time that Bitcoin (BTC) and Ether (ETH) are not securities. The SEC held during the Ripple trial that the speech reflected Hinman’s personal views and not agency policy. Then, the agency argued that Hinman’s speech reflected Ripple’s policies and not Hinman’s personal views, and so it wanted them shielded through deliberative process privilege (DPP) protection. The judge wrote, “Having insisted that it [the speech] reflected Hinman’s personal views, the SEC cannot now reject its own position.” What the SEC can do is appeal that decision within two weeks.

Coin Center objects to SEC redefining what an exchange is

Lobbying group Coin Center said it was taking a stand for free speech in its written comment on a U.S. Securities and Exchange Commission (SEC) proposal to change a rule under the Securities Exchange Act of 1934. At issue is the definition of an exchange, which the SEC suggested should “include systems that offer the use of non-firm trading interest and communication protocols.” Coin Center said the rule change would transform the agency’s definition of an exchange from a system that brings together orders to one that brings together buyers and sellers. This impacts developers and others who trade code, not tokens, and particularly decentralized exchange (DEX) developers. That is a free speech issue, according to the advocacy group. It was not the first time that charges of First Amendment violation have been leveled against the agency. The SEC said the change could “reduce regulatory disparities among like markets.”

Brazil moves ahead with crypto legislation, CBDC pilot

The Brazilian corner of the cryptoverse is a happy place, too, lately. A bill regulating the cryptocurrency market in Brazil is expected to be approved by the National Congress in the first half of this year. After being debated in the Chamber of Deputies since 2015, the bill won approval and a version unifying it with a Senate bill approved is being prepared. The bill would allow the Brazilian president to delegate crypto regulation to an existing body or create a new regulatory body. In addition, the bill foresees punishment for virtual asset services fraud and creates incentives for crypto miners to come to the country. That’s not all. The president of the Central Bank of Brazil has confirmed that a central bank digital currency pilot project will launch this year. The pilot Digital Real would have a fixed supply and be pegged to the national fiat payment system reserve transfer system (STR).