Ripple’s Daring Dance with the SEC: A Legal Tango for Crypto Clarity!

by

Ah, dear Ripple, that audacious jester of the crypto court, is now shaking the very pillars of U.S. regulation with a legal framework so bold, it could make even the most stoic of regulators blush! 🌪️💼

Ripple’s Daring Challenge to the SEC: A Legal Framework for the Ages

On the 27th of May, in a move that could only be described as theatrical, Ripple penned a formal letter to the U.S. Securities and Exchange Commission (SEC) following a tête-à-tête with the agency’s Crypto Task Force on the 20th. In this missive, they laid out a case so intricate, it could rival the finest of legal dramas, arguing when a crypto asset, once sold as part of an investment contract, should be liberated from the shackles of security status.

This letter, co-signed by Ripple’s Chief Legal Officer, the ever-eloquent Stuart Alderoty, along with the sagacious General Counsel Sameer Dhond and the astute Deputy General Counsel Deborah McCrimmon, implored the SEC to adopt a legal framework as precise as a Swiss watch, grounded in the current law and the wisdom of court precedents. They cited the 2023 decision in SEC v. Ripple Labs Inc., where Judge Analisa Torres, in a moment of judicial clarity, declared that while some institutional XRP sales were indeed investment contracts, the token itself was not a security when frolicking in the secondary markets. Ripple’s letter also referenced legal scholarship that emphasizes the delightful absence of a continuing legal relationship in most secondary crypto transactions. 🎭

To quell the tempest of regulatory uncertainty, Ripple proposed a legal standard to determine when a token has gracefully separated from its investment contract. This standard would hinge on whether any material promises from the issuer remain unfulfilled and whether subsequent holders retain enforceable rights from those promises. They also advocated for a well-structured safe harbor, a veritable lighthouse guiding market participants operating in good faith. With a flourish, the letter proclaimed:

If there is a gap in the law, it is Congress’s — not the SEC’s — to fill it. Absent delegated authority, new legal standards must be established by lawmakers.

In short, it would be inappropriate to impose new securities law obligations—such as registration or disclosure—on tokens and networks that have operated and traded in broad liquid markets, openly, transparently, and permissionlessly for a significant time.

“These assets have been integrated into the financial system, are broadly held, and no longer pose the risks that animate the SEC’s concerns,” Ripple concluded, with a wink and a nod. 😉

Read More

2025-05-30 04:57