A US Supreme Court case has attracted considerable attention from the crypto community, particularly the XRP community, as it could have significant implications for Ripple’s ongoing legal battle against the US Securities and Exchange Commission (SEC). This case, known as Loper Bright Enterprises v. Raimondo, involves a decision on whether or not to overrule the Chevron Deference Doctrine.
The Chevron Deference Doctrine provides that, in cases of ambiguity, courts may adopt a federal agency’s interpretation of a statute if it seems plausible. This doctrine was established in 1984 in the case of Chevron U.S.A. v. Natural Resources Defense Council. The Supreme Court reasoned that federal agencies, as experts, are better equipped than the courts to interpret statutes delegated to them by Congress.
The XRP community is particularly interested in the Supreme Court’s ruling in the Loper case because it could determine the approach the court will take in Ripple’s case against the SEC. If the Chevron doctrine is overruled, the court in Ripple’s case will not be obligated to consider the SEC’s interpretation of the Securities Act and whether Ripple violated it through XRP sales. However, if the Supreme Court affirms the doctrine, the judge in the case will likely be guided by the SEC’s interpretation on areas that require clarity.
The SEC has contended that all of Ripple’s XRP sales, including programmatic sales and other distributions, constituted investment contracts under the Securities Act, making XRP a security. The SEC believes that Ripple violated the law by not registering XRP as a security before offering it to the public.
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Many, including Ripple’s Chief Legal Officer Stuart Alderoty, have welcomed the potential overruling of the Chevron doctrine in the hopes that the Supreme Court will limit the authority of federal agencies like the SEC.
The Supreme Court’s ruling in the Loper case will also have broader implications for the crypto industry, particularly regarding the SEC’s continued enforcement actions. In the absence of specific crypto-related laws, the SEC has found a way to apply the Securities Act to the industry. The SEC has targeted crypto exchanges, alleging that they have operated as unregistered securities exchanges. However, there is a belief that cryptocurrencies should not be subject to the Howey Test, which is used to determine what can be considered a security.
Coinbase, for example, has argued in its motion to dismiss the SEC’s lawsuit that the SEC is acting outside its jurisdiction by bringing action against the exchange, as it does not offer securities. This argument aligns with Judge Analisa Torres’ ruling and reflects a general sentiment in the industry.
The outcome of the Supreme Court’s decision in the Loper case could thus have a significant impact on the regulatory landscape for the entire crypto industry. It could shape the SEC’s approach to enforcement actions, especially regarding the classification of cryptocurrencies as securities.
Overall, the crypto community, particularly Ripple and XRP supporters, anxiously await the Supreme Court’s ruling. The decision in the Loper case could establish a precedent that determines how cryptocurrencies are classified and regulated in the United States.
