TLDR
- Ripple CLO Stuart Alderoty submitted a formal response to the U.S. Senate Committee on Banking, Housing, and Urban Affairs.
- Alderoty expressed concerns that the proposed digital asset market structure would create more legal confusion than clarity.
- Ripple CLO criticized the broad definition of “ancillary assets” that could extend SEC jurisdiction indefinitely over many digital assets.
- He referenced the Ripple vs. SEC case where Judge Analisa Torres ruled XRP transactions on exchanges are not investment contracts.
- Alderoty proposed a “safe harbor” rule to help clarify when a digital asset transitions from a security to a commodity.
Ripple Labs’ Chief Legal Officer, Stuart Alderoty, has submitted a formal response to the U.S. Senate Committee on Banking, Housing, and Urban Affairs. This response addresses the committee’s proposed digital asset market structure. Alderoty expressed concerns over the draft legislation, arguing that it could lead to more confusion in the legal landscape. He highlighted that the proposal could push many digital assets under the SEC’s permanent control, even for transactions unrelated to fundraising.
Ripple CLO Critiques the SEC’s Expansive Jurisdiction Over Crypto Assets
Alderoty’s main criticism of the proposed legislation lies in its broad definition of “ancillary assets.” According to the Ripple CLO, the draft legislation wrongly presumes that any token associated with an investment contract would remain under SEC jurisdiction indefinitely. He pointed out that this stance could cause regulatory overreach, even when the token’s subsequent transactions have no link to the original fundraising effort.
Moreover, Alderoty referenced Judge Analisa Torres’s ruling in the Ripple vs. SEC case. The judge determined that routine sales of XRP on exchanges are not investment contracts, meaning they do not fall under securities laws. This ruling counters the draft bill’s approach, which the Ripple CLO argues could create unnecessary regulatory complications for the crypto industry.
Thank you to @BankingGOP for the opportunity to respond to your Request For Information. With over a decade of experience working with regulators all over the world—and hard-earned lessons from our SEC fight—Ripple welcomes the chance to offer our unique perspective as Congress…
— Stuart Alderoty (@s_alderoty) August 5, 2025
Ripple CLO Proposes Safe Harbor Rule to Clarify Asset Status
Instead of the proposed broad SEC control, Ripple urged Congress to establish a clear process for determining when a digital asset transitions from a security to a commodity. The Ripple CLO proposed a “safe harbor” rule that would treat a crypto token as a commodity once it has been in strong market circulation for at least five years. This rule would ensure clarity for investors and developers, giving them confidence in the market’s legal framework.
Alderoty also emphasized the importance of a consistent, federal standard for digital asset regulation. He argued that a patchwork of state-level rules would lead to confusion and fragmentation, harming innovation. A unified approach would allow the industry to thrive under a clear set of regulations, fostering growth and attracting investment.
In his response, Alderoty stressed the need for a single, consistent federal regulation for digital assets. Without it, state-level rules would create unnecessary complexity and barriers to entry for businesses. Ripple’s CLO highlighted that federal clarity could prevent regulatory fragmentation, ensuring a smoother path for industry growth.
