Ripple Labs is advocating for revisions to proposed cryptocurrency legislation in the US Senate, expressing concerns that the current version might generate more ambiguity than clarity.
In their official response submitted on August 5th, the blockchain technology company addressed potential issues related to excessive regulatory scope and imprecise definitions. Ripple argues that these factors could impede innovation within the digital asset sector.
Ripple’s feedback was solicited by the Senate following the release of the draft for the Responsible Financial Innovation Act of 2025 on July 22nd.
The legislative effort seeks to modernize crypto regulation by broadening regulatory tools, bolstering consumer protection measures, and establishing more defined classification standards for digital assets.
Ripple Highlights Its Concerns
A major point of contention for Ripple is the bill’s handling of “ancillary assets,” a term they see as potentially too broad, possibly subjecting many digital tokens to the Securities and Exchange Commission’s (SEC) oversight.
Ripple cautions that future SEC leaders might interpret these regulations in a broad manner, potentially implementing policies detrimental to the cryptocurrency industry’s advancement.
According to Ripple:
“This strategy could indefinitely subject widely traded, well-established tokens operating on open, permissionless networks such as ETH, SOL, and XRP, to SEC oversight. This would occur even when current or future transactions lack any features of a securities offering.”
Furthermore, Ripple stressed that simply being tied to past investment agreements should not result in perpetual SEC jurisdiction.
The company believes that the SEC’s regulatory reach should be limited to the specific investment deal, and not extend to all future dealings involving the asset.
Ripple stated:
“The proposed approach essentially opens a backdoor for asserting control over current transactions based on actions that are either unrelated to the transaction in question or protected by fundamental legal rights.”
Considering these points, Ripple proposes a limited timeframe for SEC jurisdiction over tokens initially sold as part of an investment agreement.
The company also urged Congress to clarify the application of the Howey Test, which is used to determine whether an asset qualifies as a security. They stressed the need for consistent application to prevent subjective interpretations that could destabilize the market.
It added:
“If Congress intends to codify the Howey test, it should do so in a manner that safeguards against misuse or manipulation by the SEC.”
Demands for Legal Certainty
Beyond issues surrounding the extent of SEC authority, Ripple implored legislators to provide distinct guidance on whether activities like staking, mining, and governance within blockchains should be categorized as securities.
The company contends that uncertainties surrounding these activities could stifle innovation and hinder the widespread adoption of blockchain technologies.
Ripple articulated:
“To ensure correct application of the Howey test, it should be explicitly stated that ‘entrepreneurial or managerial efforts’ exclude essential network functions or standard administrative tasks.”
Simultaneously, Ripple expressed support for a clause within the bill aimed at safeguarding tokens that have been actively traded for at least five years, suggesting it could guard against retroactive enforcement.
The RLUSD issuer believes that this measure will provide greater predictability and stability for established digital assets, thereby fostering confidence in the industry’s progression.