XRP: A Security or Not?

Thursday’s court decision in the Ripple/XRP case has left the crypto world divided. Some believe that the ruling confirms that XRP is not a security, while others believe that it confirms that XRP sales to institutions were unregistered security sales.

The truth is that the ruling is complex and both sides have a strong argument.

On the one hand, the court ruled that institutional sales of XRP were deemed to be unregistered security sales. The argument is that institutions were not buying XRP as a replacement for fiat currency, but rather they were buying XRP for the future potential appreciation in the token price.

On the other hand, the court also ruled that non-institutional sales—including on exchanges and secondary sales—were confirmed to NOT qualify as sales of a security.

This means that the court found that XRP is not a security in the majority of the cases being evaluated, which paves the way for continued Retail space development.

The ramifications of this ruling are immense. If XRP is not a security, then it is likely that most other cryptocurrencies will also not be classified as securities. This would create regulatory clarity for the crypto industry, which would lead to more investors allocating capital to the space.

It would also mean that exchanges could list XRP without fear of violating securities laws. This would likely lead to an increase in the price of XRP.

The SEC will have to decide how they are going to proceed with the regulatory oversight of cryptocurrency tokens. They could continue on the same path as they were before this decision, or they could adopt a revised strategy that is less aggressive.

It is also possible that the SEC will appeal the ruling. However, this would be a lengthy process, and it is not clear if the SEC would be successful.

Overall, the ruling in the Ripple/XRP case is a major victory for the crypto industry. While it’s unlikely that the SEC will mend its ways and take a more reasonable approach to regulating cryptocurrencies, they might not have the same immediate power to bully smaller entities in the meantime based on this ruling.