Ripple is once again calling on the U.S. Securities and Exchange Commission (SEC) to clearly define the boundaries between cryptocurrencies and investment contracts. In a public letter by Chief Legal Officer Stuart Alderoty, the company poses key questions and offers a legal framework for clarity.
š¹ Ripple Responds to Commissioner Peirceās Key Question
In its letter addressed to the SECās crypto working group, Ripple responds to a recent speech titled āNew Paradigmā by Commissioner Hester Peirce, who posed a critical question:
š At what point does a digital asset detach from an investment contract and cease to be considered a security?
Ripple argues that ongoing legal ambiguity is harming the market and calls for clear, actionable criteria that would remove unnecessary uncertainty for participants.
š¹ XRP and the 2023 Court Precedent
Ripple highlights the 2023 federal court ruling, which determined that XRP is not inherently a security ā only certain early institutional sales were deemed investment contracts.
The company also references a 2022 legal analysis, which concluded that most interchangeable crypto assets traded on secondary markets should not be treated as securities, since there are no enduring legal obligations between buyers and original issuers.
š¹ Ripple Proposes a Legal Test for Digital Assets
Ripple puts forward a clear legal test to determine when a token should no longer be treated as part of an investment contract. According to the proposal, a digital asset should be considered separate if:
š¹ The issuer has not made any material promises that remain unfulfilled, and
š¹ The current holder has no enforceable rights against the issuer.
Ripple argues that such criteria would offer greater legal certainty for market participants acting in good faith and protect them from enforcement based solely on a tokenās origin.
š¹ Criticism of āSufficient Decentralizationā as a Vague Concept
Ripple also critiques the commonly used but legally ambiguous term āsufficient decentralizationā, which it says fails to provide clear legal grounding for investors.
Instead, the company proposes objective measures such as:
š¹ the maturity of the network,
š¹ history of public trading,
š¹ and absence of unilateral control by a single entity.
Ripple insists that new rules should be grounded in existing law, not invented through enforcement actions.
š¹ Ripple vs. SEC: Legal Battle Nears Conclusion
This call for clarity comes as the long-running legal battle between Ripple and the SEC approaches its final stages. Although Judge Analisa Torres rejected a settlement motion on May 15 due to procedural issues, it is widely expected that both parties will refile and resume negotiations.
Ripple is using this moment not only to defend its own position but to help establish legal standards that could shape the future of the U.S. crypto industry.
š¬ What do you think? Should there be clear rules to determine when a token is no longer subject to securities laws?
#Ripple , #SEC , #Xrpš„š„ , #DigitalAssets , #CryptoNewss
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