XRP ruling puts cryptocurrencies in nuanced position, industry experts weigh in
- The SEC vs Ripple verdict essentially determined that XRP is not a security, however, its sale can be classified as one.
- The ruling implies any cryptocurrency could be a security, based on the transaction and nature of sale, institutional or secondary market.
- The decision could apply to cryptos like MATIC, ADA and others recognized as a security by the SEC, building the regulator’s cases against Binance and Coinbase.
Ripple's partial win against the Securities and Exchange Commission (SEC) has pushed cryptocurrencies into untested waters. Any cryptocurrency classified as a “security” or “non-security” can be treated differently based on the nature of the transaction.
Industry experts weighed in on the XRP ruling to alleviate holders’ concerns.
FXStreet has extensively covered the SEC vs Ripple case:
- SEC vs. Ripple update: Former SEC official explains why Ripple’s win could be overturned
- SEC vs. Ripple: Attorney John Deaton says Ripple will appeal to the Supreme Court if it loses
- Pro-XRP attorney predicts the altcoin’s rally to $2 ahead of SEC vs. Ripple verdict
XRP ruling strengthened the crypto market but changed this for all assets
Ripple’s partial win in the US SEC case was celebrated by market participants and XRP price witnessed a massive rally. The court essentially ruled that XRP token in itself is not a security, however, its sale can be classified as such under specific circumstances.
Judge Torres’ ruling indicates the potential for cryptocurrencies labeled as “securities” and “non-securities” both to be classified differently based on the context and mode of their sale. If buyers expect to profit from the company’s efforts, it is likely to be considered a security.
This complicates the regulation of cryptocurrencies and opens all assets to scrutiny, irrespective of the SEC’s label for the crypto. MATIC and ADA were labeled as securities by the SEC in its lawsuits against two of the largest cryptocurrency exchanges Binance and Coinbase.
The assets that did not make the SEC’s list could classify as securities depending on the conditions of their use.
Experts weigh in on XRP ruling
Robert Quartly-Janeiro, Chief Strategy Officer (CSO) of crypto exchange Bitrue, sees the ruling as a potential watershed moment for the broader crypto ecosystem. The CSO told FXStreet:
Despite the difficulties that Ripple and its currency XRP have faced in recent years, the company has confronted these challenges and continued to progress and develop. Clearly those who sold off during the period of uncertainty have sort to return, alongside speculators trading on the news itself but the new price of XRP will be interesting to see where it settles in due course.
Nikolay Denisenko, Co-founder and CTO at Brighty app, a Swiss Neobank told FXStreet,
Ripple was found to have violated securities law by directly selling XRP to sophisticated investors, a point the SEC is likely to utilize in future cases. The case is not entirely resolved, as the court deemed Ripple's XRP sales to institutional investors unregistered securities. This issue will be further explored in a jury trial, determining Ripple executives' involvement in these illicit sales.
Denisenko believes that the ruling will likely spark renewed calls for regulatory clarity regarding digital assets.
Ripple's case, although an overall victory for the company, plainly shows the need for a balance between regulatory compliance and fostering crypto innovation.
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Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
