Ripple CEO Brad Garlinghouse expressed his views in an interview with 60 Minutes scheduled to be broadcast this Sunday. See the interview for details.
Article written by: Margaret Brennan
Source: CBS News
Article translation: Echo, MetaEra
On the U.S. political scene, the cryptocurrency industry stands out with its heavy investment and significant influence in this year’s elections. During this year’s campaign, these companies contributed 30% of all direct corporate donations, and the gains were huge: 85% of the congressional candidates backed by the industry won their elections. After the election, the price of Bitcoin reached a record high. It is estimated that more than 17 million Americans own cryptocurrencies, and how to regulate the industry in the United States has been the focus of heated public debate. Currently, a key piece of legislation is pending in Congress. While it’s unclear whether the cryptocurrency industry can push Congress or the incoming Trump administration to enact the regulations or legality they desire, they are certainly investing heavily in hopes of reaping the rewards.
"For those who haven't realized the enthusiasm for cryptocurrencies, they may not realize how important this industry is at this moment," said Brad Garlinghouse, CEO of Ripple, whose cryptocurrency XRP is one of the world's largest.
Ripple CEO Brad Garlinghouse expressed the following in an interview with 60 Minutes scheduled to air this Sunday:
The SEC’s stance on cryptocurrencies prompted Ripple and other crypto companies to launch Fairshake, the industry’s largest super PAC, in 2023.
The most successful ETF ever launched in the U.S. is the Bitcoin ETF, which has attracted more assets at a faster rate than any ETF before it.
Ripple CEO Brad Garlinghouse
The following is part of the interview dialogue:
Margaret Brennan: Money can often make the difference in a competitive election, especially in the final stages of an election cycle. Do you think you turned the tide?
Brad Garlinghouse: Are you asking me about the large amounts of money we put into the Ohio election, did that have an impact? Absolutely. Do I think we had an impact on Senator Elissa Slotkin, a Democrat in Michigan? Yes, absolutely. I also think we had an impact on Senator Gallego, a Democrat in Arizona.
(Ripple's cryptocurrency XRP became the world's third-largest cryptocurrency last week. Ripple and two other companies donated $144 million to Republican and Democratic super PACs that support cryptocurrency.)
Margaret Brennan: So you see this election as a major victory?
Brad Garlinghouse: Absolutely.
Margaret Brennan: But some people will look at this and say, "You guys bought the election."
Brad Garlinghouse: At the end of the day, voters voted. We just, like many industries, had our own way of promoting candidates to voters.
Margaret Brennan: But you used the money in your coffers to help strengthen the candidate, right, whatever it was…
Brad Garlinghouse: Yeah, we did.
Margaret Brennan: So do you think that for any legislator who wants to run for office, they have to take their industry seriously? Or have a fear of their industry?
Brad Garlinghouse: I think all citizens should expect members of Congress, the Senate, and the House to be thinking about how technology can be used to benefit citizens.
Margaret Brennan: Prior to this cycle, in June 2021, Donald Trump said, “Bitcoin looks like a scam.” Do you understand what happened with this shift?
Brad Garlinghouse: I haven't witnessed it. I think it's clear that Trump has embraced cryptocurrency and cryptocurrency has embraced Trump. Three weeks before the election, Trump announced the launch of a new digital currency in which he had a financial stake.
Margaret Brennan: From your perspective, is this a conflict of interest?
Brad Garlinghouse: Whether there is a conflict of interest or not, voters know: "We want this person to be our president." Voters can express their opinions better than I can.
Trump’s cabinet picks have spoken very positively about cryptocurrencies. Here’s what his pick for Treasury Secretary, Scott Bessent, told Fox Business News…
Bessent said on Fox Business News: "Crypto represents freedom, and the crypto economy is here to stay"
Perhaps most importantly, Trump last week picked a new chairman for the SEC. Paul Atkins, a former SEC commissioner who has done some consulting work for cryptocurrency companies, is expected to take a very different approach than Biden-era chairman Gary Gensler, who filed more than 120 lawsuits against cryptocurrency companies. Last year, Gensler told the House Financial Services Committee…
Gensler: 'I've never seen an area so out of step with the laws that Congress has set'
Ripple CEO Brad Garlinghouse said the SEC’s approach was the main reason his company and two others created the largest industry super PAC, Fairshake.
Brad Garlinghouse: People ask, “Why would these companies come together and organize and say, ‘This is important?’ ”
Margaret Brennan: If the SEC chairman wasn't Gary Gensler --
Brad Garlinghouse: I’m not sure Fairshake exists.
Margaret Brennan: Really?
Brad Garlinghouse: Yes.
In this regard, John Reed Stark, former head of the U.S. Securities and Exchange Commission’s Internet Enforcement Division, said: “Any amount spent by the cryptocurrency industry on legal defense or power-for-money transactions is insignificant compared to the savings lost by cryptocurrency investors due to fraud and failure.”
John Reed Stark: There is absolutely a war on cryptocurrency. The clear mandate as of these election results is that the SEC needs to stop cryptocurrency, and that’s exactly what’s going to happen. Cryptocurrency is a scourge. It’s not something that society needs. It has no use. It’s just pure speculation. Remember, cryptocurrency has no balance sheet. There are no financial statements.
John also said that he does not hold any cryptocurrency and has never worked for the industry. Like Garlinghouse, he believes that the crypto PAC took advantage of this culture and manipulated voters to give Trump power. But he insists that cryptocurrency is dangerous.
Margaret Brennan: You're talking about SEC filings. There's no public disclosure requirement.
John Reed Stark: Exactly. There's nothing. But there's also no audits, no checks, no reviews, no net capital requirements - no permissions for the individuals involved. And there's no transparency. And that creates real systemic risk, not just risk for investors. But the other part that people don't really talk about is the serious externalities that come with cryptocurrencies.
Margaret Brennan: What is your point?
John Reed Stark: Every crime you can think of is now easier to commit because of cryptocurrency, especially ransomware, human trafficking, sex trafficking, sanctions evasion, money laundering. North Korea is using cryptocurrency to fund its nuclear weapons program. Sam Bankman-Fried was also convicted of fraud in what was once one of the world’s largest cryptocurrency exchanges and a prime example of what can happen without proper regulation. The Bahamas-based FTX exchange collapsed in 2022, jeopardizing $8 billion in customer assets, most of which were outside the jurisdiction of U.S. regulators.
Margaret Brennan: There was crime there, there was fraud.
Brad Garlinghouse: I think it's like when we say Bernard Madoff went to jail, that doesn't mean every hedge fund manager is a criminal.
Margaret Brennan: Absolutely—
Brad Garlinghouse: There are actually a lot of excellent players in the cryptocurrency field.
He said his company has 900 employees and has been working with regulated financial institutions to give people faster and cheaper ways to send money overseas. XRP is the digital currency the company uses to do that. But Ripple also sells its digital currency XRP to investors, and XRP is now traded on exchanges where people can buy and sell it in the hope of making a profit.
Margaret Brennan: So the SEC sued your company in December of 2020. That was at the end of the Trump administration. Why?
Brad Garlinghouse: Well, their allegation is that Ripple and our sales of XRP represented the sale of unregistered securities.
Margaret Brennan: Securities like stocks or other asset classes?
Brad Garlinghouse: Yes.
Brad Garlinghouse said Ripple has spent more than $150 million fighting the SEC in court, arguing that the digital currency XRP should not be subject to the agency's registration and disclosure requirements like stock offerings.
Brad Garlinghouse: I went to Harvard Business School. I thought I was pretty knowledgeable about questions like, “What is a security?” So I never considered the possibility of, “Well, maybe XRP is a security.”
John Reed Stark: I've read every case. I've read every motion. The judges have said over and over again that these are securities. They didn't say, "This is a thriller trial," they said, "This is a clear cut trial."
Brad Garlinghouse disagrees. He also believes that existing securities laws are not well adapted to new technologies and that Congress needs to draft new rules for these new digital assets.
Brad Garlinghouse: We're not asking for deregulation. We're asking for regulation. So we've been saying, "Hey, look, just give us clear rules."
Margaret Brennan: So what is your strategy for spending money in elections? Is it to create the rules that you want to create?
Brad Garlinghouse: No. Our goal is just to set the rules. I mean, the good news is --
Margaret Brennan: I mean, not just any rules.
Brad Garlinghouse: Well, there was a bill that passed the House this summer that had bipartisan support called FIT21.
Margaret Brennan: Uh-huh.
Brad Garlinghouse: This is a Republican bill. 71 Democrats supported this bill.
FIT21 seeks to establish a new regulatory framework for digital assets. While the SEC will still play a role, the legislation puts more responsibility for regulating cryptocurrencies on the CFTC, or the Commodity Futures Trading Commission, which oversees futures markets for everything from gold to pork bellies… and already has some jurisdiction over Bitcoin.
John Reed Stark: The SEC is probably ten times the size of the CFTC. One of the SEC's responsibilities is to protect investors. They have armies of lawyers who go out and do these inspections, reviews, and audits. The CFTC is more concerned with the integrity of the market. I don't blame the cryptocurrency industry for wanting to be regulated by the CFTC. It's an easier regulatory regime.
Margaret Brennan: The bill had bipartisan support and passed the House.
John Reed Stark: I'm not surprised that it's gotten so much support because --
Margaret Brennan: Why?
John Reed Stark: It's not going to pay for members of Congress or members of the Senate, whoever you're referring to, to be against cryptocurrency. Nobody's going to donate to them for that.
Lawmakers from both parties said that cryptocurrency companies cannot escape scrutiny because of the consumer protection provisions included in the bill. While it is unclear whether Republican leaders will reintroduce FIT21 in the new Congress, both parties agree that measures must be taken to close regulatory gaps and prevent chaos in the existing market.
Brad Garlinghouse: Where would the United States be better served? Would it be in our interest to have clear rules that allow this industry to flourish here at home? Or should we push it overseas where people are less protected?
Margaret Brennan: But even some of the big financial people on Wall Street are skeptical of cryptocurrencies.
Brad Garlinghouse: I think whenever a new technology, a new industry comes along, there are huge skeptics. Contrary to what you're describing, the most successful ETF ever in the U.S. is --
Margaret Brennan: Exchange-traded funds.
Brad Garlinghouse: It's the Bitcoin ETF. I think the Bitcoin ETF that was launched in January of this year has attracted more assets at a faster rate than any ETF before.
John Reed Stark: Am I surprised that these big banks are getting into crypto? No, because there are huge fees to be made from it.
Margaret Brennan: Do you think everyday people who want to make money in the cryptocurrency space understand the risks they're taking?
Brad Garlinghouse: I think a lot of people understand that this is a volatile market. And I think a lot of people choose to participate in it. A lot of people choose to participate in the gambling market, which is also very dangerous. As a government, should we be telling people what to do with their hard-earned money?
Ripple’s XRP currency has risen more than 300% in value since the election, and Brad Garlinghouse recently announced that the company would commit an additional $25 million to industry super PAC Fairshake. With this donation, Fairshake already has $103 million to spend on cryptocurrency-backed candidates in the midterm elections in two years.
