- Ripple has urged the SEC to clearly define when a digital asset separates from an investment contract and should no longer be treated as a security.
- The company proposed an objective legal test and criticized vague regulatory standards, emphasizing the need for clarity grounded in existing law.
Ripple Ramps Up Pressure for Regulatory Clarity
Ripple is turning up the heat on the U.S. Securities and Exchange Commission (SEC), filing a supplemental letter urging the regulator’s Crypto Task Force to clarify when a digital asset should no longer be treated as part of an investment contract. The move intensifies Ripple’s long-standing campaign for clear and consistent rules that don’t stifle innovation.
The letter, submitted on May 28 by Ripple’s Chief Legal Officer Stuart Alderoty, directly responds to a pivotal question raised by SEC Commissioner Hester Peirce in her recent “New Paradigm” speech: when does a digital asset like XRP cease to be a security?
Ripple’s Case: XRP Isn’t a Security—And Many Others Aren’t Either
Ripple’s letter references the 2022 legal paper The Ineluctable Modality of Securities Law, which argues that fungible digital assets traded on secondary markets typically lack the ongoing issuer obligations that define a security. Ripple also pointed to its partial legal victory in 2023, when the court ruled that XRP itself is not inherently a security, though certain early institutional sales did qualify as investment contracts.
To bring clarity, Ripple proposed a straightforward legal test: a digital asset should be presumed not to be part of an investment contract unless (1) the issuer has made unfulfilled material promises and (2) the holder has enforceable rights against the issuer.
Calling Out “Fuzzy” SEC Frameworks
Ripple’s letter also calls out the SEC’s use of ambiguous concepts like “sufficient decentralization.” Instead, Ripple advocates for measurable standards like public trading history, network maturity, and lack of unilateral control.
“A sound safe harbor should operate within, not expand, the existing scope of federal securities law,” the letter reads, underscoring Ripple’s push for objective, law-based criteria.
Legal Showdown Continues
The filing comes amid the final phases of Ripple’s legal war with the SEC. While a proposed settlement was recently rejected by Judge Analisa Torres due to procedural issues, both parties are expected to refile.
With this latest move, Ripple is making it clear: it’s not just defending XRP—it’s fighting for the future of the entire crypto industry.
