Ripple, a prominent cryptocurrency company, has achieved a significant victory in a court battle against the U.S. Securities and Exchange Commission (SEC). The court ruled on July 13 that Ripple’s digital asset, XRP, is not a security. This ruling sets an important precedent for the entire U.S. crypto industry and establishes clarity on the classification of crypto assets and securities.
The court’s decision firmly stated that XRP, as a digital token, does not inherently fall under the definition of a security. This challenges the SEC’s argument that all standalone crypto tokens should be classified as securities. Ripple CEO Brad Garlinghouse expressed his satisfaction with the court’s ruling, stating that it deals a significant blow to the SEC’s regulation-by-enforcement agenda. He hopes that this decision will serve as a turning point for Congress to establish clear rules for cryptocurrencies in the United States.
The court ruling has several key findings, including the determination that Ripple’s XRP sales on exchanges, sales by Ripple executives, and distributions to developers, charities, and employees are not securities. This distinction between the token itself and the manner of its sale is crucial and will have far-reaching implications for the classification of digital tokens in the future. Ripple’s Chief Legal Officer, Stu Alderoty, believes that this ruling can be used as a defense by others facing SEC scrutiny, challenging the agency’s enforcement record and its reliance on settlements with players lacking the resources or conviction to fight back.
While the court proceedings continue, the focus will now be on specific contractual sales to institutional investors that the court identified as securities. Everything else regarding XRP has been resolved as a matter of law. Ripple, however, remains committed to promoting clear crypto regulation in the United States. The company will also continue to invest in jurisdictions that have well-defined regulatory frameworks. Notably, the Monetary Authority of Singapore recently granted Ripple an In-Principle Approval (IPA) for a Major Payments Institution License, demonstrating the company’s dedication to operating within established guidelines.
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After the court ruling, several U.S. exchanges that had previously delisted XRP due to uncertainty over its security status have either relisted the digital asset or announced plans to do so. These exchanges include Coinbase, Kraken, Gemini, Bitstamp, and others. Additionally, XRP remains listed on numerous exchanges globally. Foreign regulators in countries like Japan, Switzerland, the UAE, and the UK had already determined that XRP did not fall under the classification of a security, providing further validation for Ripple’s arguments.
This landmark victory for Ripple is a significant step towards achieving clearer crypto regulation in the United States. It sends a message to the entire crypto industry that tokens with utility, like XRP, should not be automatically classified as securities. With the court’s ruling, Ripple hopes to encourage Congress to establish comprehensive rules for cryptocurrencies in the country. As the crypto industry continues to evolve, regulatory frameworks will play a crucial role in fostering innovation and protecting investors. This victory for Ripple sets the stage for a more transparent and secure future for the U.S. crypto industry.
