Ripple tells the Securities Commission that fungible cryptocurrencies in secondary sales are not securities
Ripple argued in a letter to the Securities Commission that fungible cryptocurrencies are not securities in secondary transactions. Ripple, the blockchain company behind XRP, claimed that fungible cryptocurrencies are not securities when transferred in secondary transactions, in a recent letter sent to the U.S. Securities and Exchange Commission (SEC).
In its May 27 letter, Ripple cited U.S. attorney and cryptocurrency law opinion leader, Lewis Cohen, to support its claim. In his widely cited 2022 article “The Inevitable Modality of Securities Law: Why Fungible Crypto Assets are Not Securities,” he wrote:
“[T]here is currently no basis in law related to ‘investment contracts’ to classify most fungible crypto assets as ‘securities’ when transferred in secondary transactions.”
In his article, Cohen explained that in secondary transactions, an investment contract transaction is generally not present. Furthermore, he stated that fungible cryptocurrencies “do not create or represent the necessary legal relationship” between a legal entity and the holder, which is the “distinctive characteristic of a security.”
