Ripple’s settlement could create a regulatory gap, U.S. SEC Commissioner warns

Caroline Crenshaw, a U.S. SEC Commissioner, suggested on May 8th that the agency’s settlement with Ripple could create a regulatory gap. She added that the settlement joined a line of dismissals that collectively eroded the credibility of the agency’s lawyers in court, who were being asked to take legal positions today contrary to the ones taken just months ago.

U.S. SEC’s Crenshaw argued that the agency’s settlement with Ripple, alongside the programmatic disassembly of its crypto enforcement program, did a ‘tremendous disservice’ to the investing public and was likely to create a regulatory vacuum that undermined the court’s role in interpreting U.S. securities laws. She pointed out that she could not support the settlement.

Crenshaw said the agreement, which stated that neither the SEC nor Ripple would seek to vacate or amend any part of the district court’s summary judgment ruling, undermined the court’s order and it ‘razed’ the civil penalty ruling as well as the court-imposed injunction. She pointed out that the Commission could do absolutely nothing if Ripple decided to sell unregistered XRP tokens to institutional investors—in plain defiance of the court’s order, rendering the hundreds of hours spent by the court in this matter meaningless.

Crenshaw says the U.S. SEC’s settlement with Ripple could create a regulatory gap 

SEC’s Crenshaw slams Ripple settlement, warns of ‘regulatory vacuum’ #Norque #NOQ #Bitcoin #ETH #AI #Blockchain #Blockchain #Law #Policies #Regulation #Crypto

— NORQUE-NOQ (@NorqueNoq) May 9, 2025

Crenshaw criticized the proposed SEC-Ripple settlement, warning it could harm investor protections and weaken crypto regulation by creating a regulatory vacuum. The Commission and Ripple submitted a settlement that included dissolving an injunction and returning to Ripple roughly $75 million from escrow.

The Commissioner also claimed that the settlement undermined the U.S. SEC and its enforcement program because it subverted the clear and honest application of the facts to the law–a cornerstone of any effective law enforcement program. She added that even if the Crypto Task Force re-wrote registration rules for crypto securities in the future, that did not somehow alter the rules that were in place at the time that Ripple violated them.

“We are today accepting a diluted settlement that erases the investor protections we already won, based on a non-existent framework that may or may not come to fruition potentially years from now…This creates a regulatory vacuum with no end in sight.”

–Caroline Crenshaw, Commissioner at the U.S. SEC

Crenshaw argued that by allowing Ripple to continue operating without admitting wrongdoing or significantly altering its behavior, the U.S. SEC may have set a precedent that weakened its regulatory position and could ultimately harm investors in the long term.

Pierce expresses doubt about the terms of the settlement 

U.S. SEC Commissioner Hester Peirce (Crypto Mom) also expressed skepticism about the terms of the settlement, claiming that the SEC’s actions against Ripple had caused uncertainty in the crypto market and could have far-reaching implications for the industry as a whole. She was particularly concerned that the agency’s approach to regulating crypto was ‘stifling innovation’ and driving projects overseas.

Peirce called for more transparency from the U.S. SEC when it came to regulating the crypto market. She stated that clear guidelines were essential for companies operating in the space to comply with regulations and avoid costly legal battles. 

Peirce’s criticism of the proposed settlement highlighted the ongoing debate within the agency about how to approach crypto and blockchain technology. The U.S. SEC’s enforcement actions against Ripple were being watched closely by the crypto community as they could set a precedent for how the agency regulated other digital assets. 

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