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ZEC $1,274 Ripple backs SEC crypto rule after $150M legal fight
Ripple filed a 20-page letter supporting the SEC's proposed crypto regulation and asked for changes to how investment contracts end.
Key takeaways
- The bill so far. Ripple says its past legal dispute with the SEC cost more than $150 million.
- Two proposed caps. The SEC's draft offers exemptions of up to $5 million over four years and up to $75 million within 12 months.
- Not yet in force. Neither exemption is currently active under the proposed framework.
What happened
Ripple filed a 20-page comment letter with the SEC on October 20 in support of the agency's proposed Regulation Crypto Assets. Chief Legal Officer Stuart Alderoty confirmed the filing on X and said the company's earlier litigation with the regulator had cost more than $150 million. He wrote that the SEC has clear authority to move ahead with the proposal.
The core of Ripple's argument is that a token and the investment contract under which it was sold are separate things. In Ripple's view, an investment contract can be a security even when the token itself is not. The company wants the SEC to decide when an investment contract ends by examining what an issuer promised investors, rather than by applying a general test of decentralization.
Ripple also asked for more clarity on Form TR filings, federal securities classifications and trades on secondary markets. It said decentralization can be measured in several ways, such as governance participation, node distribution, software contributions and economic control, and argued that none of these measures reliably shows whether an issuer's commitments are still in place.
Why it matters
The SEC's draft, released in August, would create two registration exemptions for qualifying investment contracts involving digital assets. One would let eligible startups raise up to $5 million over four years. The other would allow offerings of up to $75 million within 12 months, with extra disclosure and financial reporting. Neither exemption is currently in force.
The draft also includes a safe harbor for when a cryptocurrency is no longer tied to an investment contract. Under the proposal, a contract could end once an issuer has completed or permanently stopped the essential managerial activities it promised investors, as long as it makes no new commitments of that kind. Ripple backs that approach but opposes adding decentralization as a separate legal requirement.
Ripple said years of regulatory uncertainty and enforcement-driven policymaking pushed crypto innovation abroad. Alderoty said the proposal follows the rule set by the Supreme Court's Howey decision.
Questions readers ask
What did Ripple send to the SEC?
Ripple filed a 20-page comment letter on October 20 supporting the SEC's proposed Regulation Crypto Assets. The letter asks for changes to how investment contracts, issuer obligations and secondary-market transactions are treated.
How much did Ripple's legal fight with the SEC cost?
Ripple says its previous legal fight with the SEC cost more than $150 million. Alderoty cited that figure when he confirmed the comment letter on X.
What are the SEC's proposed crypto exemptions?
The draft offers two registration exemptions: up to $5 million over four years for eligible startups, and up to $75 million within 12 months with added disclosure and reporting. Neither is in force yet.
Why does Ripple oppose a decentralization test?
Ripple argues that decentralization can be measured in different ways, including governance participation, node distribution, software contributions and economic control. It says those measures cannot reliably show whether an issuer's contractual commitments remain in effect.
Sources · 5 publishers
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Ripple backs SEC crypto rule after $150M legal fight, seeks key changes -
Ripple Backs SEC's Crypto Regulation Proposal -
Ripple Backs SEC’s Proposed Crypto Regulation, Calls for End to Case-by-Case Enforcement -
Ripple, Cardano, Chainlink, Hedera, Stellar, Aptos & Avalanche Support SEC ‘Regulation Crypto Assets’ -
XRP News: Ripple Urges SEC to End Crypto Regulation Uncertainty in the U.S.
