The Blockchain Association has filed for permission today to submit a brief in the legal battle between the Securities and Exchange Commission and Ripple Labs that would give further context on how the agency's arguments in the case could affect the wider crypto industry.
If approved, the accompanying amicus curiae brief containing the group's arguments would be taken into account as the court weighs a summary judgment. These types of briefs can offer context and insight on the facts at hand, but cannot introduce new facts or evidence into the case.
The case, before the U.S. District Court for the Southern District of New York, recently reached the summary judgment stage, with both sides arguing that a trial isn't necessary since the facts are not in dispute, and instead asking a judge to rule on the facts that have already been presented. The Blockchain Association, a Washington, D.C.-based advocacy group, is seeking to give context to the wider effects the ruling could have for the crypto industry.
"It is no exaggeration to say that a ruling in this case, if not cabined to the particular facts and legal issues that are minimally necessary to decide this case, could have an extremely adverse effect on a trillion-dollar industry, and one that — given the limitless possibilities of blockchain technology — might reflect a significant portion of the future of the American economy," the Blockchain Association said in a filing supporting the submission of the brief.
The proposed brief includes examples from the industry that illustrate how tokens are used in practice outside of the bounds of what's considered an investment contract.
The SEC first brought a case against Ripple in 2020 over allegedly failing to register its XRP token as a security. Since then, the legal process has seen the SEC argue that XRP qualifies as a security not only during the initial issuance of the token, but also as it continues to be sold on secondary markets.
"The SEC’s draconian view that a token initially sold in an investment contract continues to be inextricably linked with that investment contract when it is subsequently transferred — even when any legal rights between the issuer and the initial purchaser are not transferred with the token — would destroy nearly an entire industry," the amicus brief said.
The brief seeks to provide context on how much of the industry could fall under what it perceives as ill-defined regulations for how tokens are used. It also takes issue with the SEC's "pattern of 'regulation by enforcement'" and "history of inconsistent, incomplete, and confusing public statements."
"The SEC’s position that market participants can simply follow the securities laws falls flat, because the securities laws do not contemplate how an asset that may have been issued as a security can exist when it is no longer attached to any form of investment contract, a crucial consideration when attempting to apply [the Howey Test]."
The Blockchain Association's request joins a number of other groups' attempts to submit their amicus arguments, including a coalition of XRP holders and an XRP-focused payments app called SpendTheBits Inc.
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