Ripple requests that the SEC define when a digital token no longer qualifies as a security under U.S. law.
The company proposes a “maturity” test to assess whether a token remains tied to its original investment contract.
Ripple supports legal protection for compliant developers but criticizes unclear regulatory enforcement without statutory updates.
Ripple has issued a follow-up letter to the U.S. Securities and Exchange Commission’s (SEC) Crypto Task Force, directly addressing Commissioner Hester Peirce’s recent “New Paradigm” speech. The letter from the company takes issue with the SEC’s rules for digital assets, highlighting how and if someone can delink a token sold at first as a security from being an investment contract.
Ripple emphasized that most fungible digital assets should not be treated as securities when traded on secondary markets. The company argues that such tokens generally lack the ongoing contractual relationship required to qualify as securities under existing law. This position aligns with the 2023 federal court ruling by Judge Analisa Torres in SEC v. Ripple, which determined XRP itself is not a security in secondary market sales, though some institutional offerings did meet the security criteria.
Ripple Calls for Legal Consistency in Crypto Oversight
The San Francisco-based firm criticized the SEC’s reliance on vague enforcement practices and urged the agency to issue clear guidance using current laws. Ripple stated that only specific, material promises in the original investment contract, those that remain unfulfilled or create enforceable rights, should determine if a token continues to be a security.
Ripple proposed a “maturity” test to help identify when a digital asset exits the scope of securities laws. The suggested framework includes measurable factors such as market capitalization thresholds and a sustained period of open and permissionless network operation. It also insists that no single entity should hold unilateral control over the network’s core functionalities.
Safe Harbor and Regulatory Dialogue Emphasized
In its communication, Ripple voiced support for a safe harbor provision that protects good-faith actors developing compliant digital asset projects. However, the company also warned against presuming that all digital assets fall under the securities framework by default.
It encouraged ongoing dialogue between regulators and industry stakeholders to establish coherent, applicable standards.
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