Ripple has urged the U.S. Securities and Exchange Commission (SEC) to adopt its proposed Regulation Crypto Assets, arguing that clearer rules could prevent cryptocurrency companies from facing costly legal disputes over whether their tokens fall under securities laws.
Summary
- Ripple filed a 20-page comment letter on October 20 supporting the SEC’s proposed Regulation Crypto Assets.
- The company argues that an investment contract can be a security without making the associated cryptocurrency a security itself.
- Ripple wants the SEC to judge when investment contracts end using an issuer’s promises, not a general decentralization test.
- The filing seeks additional clarity on Form TR filings, federal securities classifications and secondary-market transactions.
- Ripple says its previous legal fight with the SEC cost more than $150 million.
In an October 20 comment letter, the company supported the regulator’s proposed exemptions for certain cryptocurrency offerings while asking for changes to how investment contracts, issuer obligations and secondary-market transactions are treated.
Ripple Chief Legal Officer Stuart Alderoty confirmed the submission in a post on X, saying the company’s past litigation had cost more than $150 million. He argued that businesses should not need years of court proceedings to determine their obligations under federal law.
Ripple backs SEC rule but rejects decentralization as a legal test
Ripple’s main argument concerns the distinction between a digital asset and the investment contract under which it may have been offered or sold.
The company says an investment contract can qualify as a security without automatically making the associated token a security. Its interpretation relies on the Supreme Court’s Howey test, which examines the circumstances of an investment arrangement.
Under the SEC’s proposal, an investment contract could end once the issuer has completed or permanently stopped the essential managerial activities it promised investors, provided it makes no new commitments of that kind.
Ripple supports that approach but opposes turning decentralization into a separate legal requirement.
The filing argues that decentralization can be measured in different ways, including governance participation, node distribution, software contributions and economic control. Ripple says those measures cannot reliably determine whether an issuer’s contractual commitments remain in effect.
Instead, the company wants regulators to examine what an issuer expressly promised investors and whether those promises have been fulfilled or withdrawn.
It asks the SEC to preserve that approach in the final regulation and avoid additional tests based on whether a cryptocurrency is associated with a company or an independent network.
Proposed crypto exemptions could cover offerings up to $75 million
The SEC unveiled Regulation Crypto Assets in August, proposing two registration exemptions for qualifying investment contracts involving digital assets.
One pathway would allow eligible startups to raise up to $5 million over four years. A separate exemption would permit offerings of up to $75 million within 12 months, subject to additional disclosure and financial reporting requirements.
Neither exemption is currently in force under the proposed framework.
The draft contains a separate safe harbor addressing when a cryptocurrency is no longer associated with an investment contract. Ripple supports this provision because it would provide a defined process for determining when an issuer’s original commitments have ended.
As crypto.news previously reported, Galaxy Research estimated that hundreds of token issuers could eventually use the proposed process.
Galaxy argued that establishing when securities obligations end could be more useful to some existing cryptocurrency projects than the new fundraising exemptions.
Ripple’s filing takes a related position, although it asks the SEC to make the procedures more dependable for exchanges, brokers and other market participants.
Ripple seeks clearer Form TR and secondary-market protections
Among the requested changes, Ripple wants greater certainty around Form TR, the proposed public filing used to establish that an issuer has completed or permanently ceased its essential managerial activities.
The company argues that exchanges and brokers should be able to rely on a properly filed form when making decisions about trading a token. Without that protection, intermediaries could face uncertainty over whether subsequent statements by an issuer affect the asset’s legal treatment.
Ripple wants the treatment of separated crypto assets to be consistent across the Securities Act, Exchange Act, Investment Company Act and Investment Advisers Act.
Its letter warns that recognizing a token as separate from an investment contract under only two statutes could leave investment funds and advisers facing different interpretations.
The company has proposed further clarification around secondary-market transactions under Rule 500. Its concerns focus on whether ordinary trading should be treated as part of an issuer’s original investment arrangement after the relevant promises have ended.
Separate recommendations from Hyperliquid’s policy group addressed token trading, airdrops and buybacks, showing that other industry participants are asking the SEC to refine different parts of the same proposal.
Past XRP lawsuit shapes company’s position
Ripple’s comments follow its years-long legal battle with the SEC over XRP sales.
In July 2023, a federal judge ruled that XRP itself was not inherently an investment contract, while distinguishing between different types of transactions involving the token.
The latest filing cites the ruling and says exchanges including Coinbase and Kraken restored XRP trading for U.S. customers after the decision.
Ripple claims it spent more than $150 million on legal fees while challenging the SEC’s earlier position.
The letter provides further figures to support its argument about regulatory uncertainty. Citing research on the cryptocurrency industry, Ripple says the U.S. share of global crypto developers declined from 38% in 2015 to 19% in 2024.
The company reported that its U.S. hiring doubled in 2024 compared with 2023, with most of its open positions located in the country by early 2025.
Ripple argues that formal rules would be more durable than regulatory interpretations or enforcement policies that future SEC leadership could reverse.
The public comment deadline for Regulation Crypto Assets was October 20. The proposal remains subject to the SEC’s review and possible revisions before any final rule is adopted.
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