- Ripple supports the SEC’s proposed Regulation Crypto Assets but opposes limiting Form TR filings to projects that are completed rather than abandoned.
- Ripple seeks clearer rules on investment contracts, token classifications, and exemptions for secondary-market trading under the proposed SEC framework.
- Ripple cites its $150 million legal battle with the SEC to highlight the financial costs of regulatory uncertainty surrounding XRP and crypto markets.
Ripple has urged the U.S. Securities and Exchange Commission (SEC) to finalize its proposed Regulation Crypto Assets, citing years of uncertainty over digital asset rules. In a comment letter filed with the agency, Chief Legal Officer Stuart Alderoty backed a framework grounded in existing securities laws. The company also called for changes to several provisions affecting token issuers and secondary-market trading.
Ripple Challenges SEC Rules on Investment Contracts
Ripple argues that an investment contract, rather than the token itself, constitutes a security under the Supreme Court’s 1946 Howey test. Alderoty said the proposal follows that principle, emphasizing issuers’ actual promises and when those obligations end.
Under proposed Rule 400, issuers could file Form TR to certify that promised work has finished or been abandoned. However, Ripple opposes restricting this option to completed projects, arguing that abandoned work also ends buyers’ expectations of profits.
The company also rejects dividing tokens into “company-backed” and “network” categories. It warns that this approach could revive the SEC’s earlier reliance on implicit promises. Additionally, Ripple cited an example where automatically using 5% of sales to repurchase and burn tokens could create an investment contract.
Ripple Seeks Changes to Proposed Crypto Regulations
Ripple cited Sections 28 of the Securities Act and 36 of the Exchange Act as authority for exemptions covering classes of securities. According to its letter, the September 15 Senate vote that failed to advance the Digital Asset Market Clarity Act does not remove that authority.
The company also wants Rule 400 to clarify that skipping Form TR does not establish a presumption that a token involves an investment contract. Meanwhile, it seeks changes to Rule 500(b), which overrides state law for secondary-market trades but leaves registered dealers without a defined end date for exemptions.
XRP Lawsuit Highlights Financial Cost of Uncertainty
Ripple cited its legal dispute with the SEC, which sued the company in December 2020 over XRP sales. XRP fell roughly 70% within days, wiping out about $15 billion in market value as exchanges restricted or removed U.S. trading.
However, a July 2023 court ruling that XRP was not inherently a security added roughly $21 billion to its market capitalization. Coinbase and Kraken restored U.S. trading that day. Alderoty said Ripple spent more than $150 million obtaining legal clarity.
The letter also cited a National Cryptocurrency Association study estimating clearer rules could have supported 382 to 1,518 additional U.S. token offerings from 2022 through October 2026, attracting $325 million to $1.117 billion in capital.
