Ripple Labs has urged the US Senate to revise its proposed crypto legislation, warning that the current draft introduces more confusion than clarity.
The blockchain firm submitted its response on Aug. 5, addressing concerns about regulatory overreach and vague definitions that could stifle innovation across the digital asset space.
The comments come in response to the Senate’s call for feedback on the draft of the Responsible Financial Innovation Act of 2025, which was released on July 22.
The bill aims to modernize crypto oversight by expanding regulatory tools, improving consumer protections, and providing clearer classification rules for digital assets.
Ripple highlight concerns
One of Ripple’s key concerns is the bill’s treatment of “ancillary assets,” a vague term that could place many digital tokens under SEC jurisdiction.
The company warns that this could lead future SEC leadership to interpret the regulations loosely, potentially enforcing policies that undermine the growth of the crypto space.
According to the firm:
“This approach could subject long-established, widely traded tokens operating on open and permissionless networks, including ETH, SOL, and XRP, to perpetual SEC oversight, even when current or future transactions bear none of the hallmarks of a securities offering.”
Moreover, Ripple emphasized that assets tied to past investment contracts should not be perpetually subject to SEC jurisdiction.
The company argues that the SEC’s authority should be limited to the specific transaction in question, not extended to future trades of the asset.
The firm noted:
“The approach taken by the draft provides a backdoor to assert jurisdiction over present-day transactions based on conduct that is either irrelevant to the transaction at issue or barred from enforcement by fundamental legal protections.”
Considering this, Ripple proposed a fixed time period for SEC jurisdiction over tokens initially sold as part of an investment contract.
The company also called for Congress to clarify the application of the Howey Test, a standard used to determine whether an asset is a security, ensuring it is consistently applied without leaving room for subjective interpretations that could destabilize the market.
It added:
“If Congress intends to codify the Howey test, it should do so in a way that prevents misuse or manipulation by the SEC.”
Calls for legal clarity
In addition to concerns over SEC powers, Ripple urged lawmakers to provide clear guidelines on which blockchain activities, such as staking, mining, and governance, should be regulated as securities.
The company argued that uncertainty surrounding these activities could discourage innovation and hinder the broader adoption of blockchain technologies.
It stated:
“To avoid misapplication of the Howey test, it should be explicitly stated that ‘entrepreneurial or managerial efforts’ do not include core network functions or routine administrative services.”
Meanwhile, Ripple also supported a provision in the bill aimed at protecting tokens actively traded for at least five years, suggesting it could offer protection from retroactive enforcement.
The RLUSD issuer believes this would provide more predictability and stability for established digital assets while helping the industry move forward confidently.
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