In a bold move that could reshape the regulatory landscape for digital assets, Ripple has asserted that fungible cryptocurrencies should not be classified as securities in secondary sales. The blockchain heavyweight, known for its XRP token, communicated these sentiments in a letter to the US Securities and Exchange Commission (SEC) dated May 27, 2025. Ripple’s stance challenges the SEC’s historical views and leans on prominent legal minds for support.
Ripple’s Stand: Not All Crypto Are Securities
Ripple’s argument hinges on the insights of Lewis Cohen, a revered figure in crypto law. His 2022 paper, “The Ineluctable Modality of Securities Law,” argues that most fungible crypto assets don’t fit the legal definition of securities when traded in secondary markets. According to Cohen, these transactions lack the specific legal relationship between issuer and holder that typifies securities. Ripple’s letter emphasizes this point, asserting that the SEC’s broad classification of cryptocurrencies as securities is misplaced and outdated. This perspective aligns with recent discussions where crypto groups have urged the SEC for clarity on staking, emphasizing the need for nuanced regulatory approaches.
Adding to the conversation, SEC Commissioner Hester Peirce recently criticized the agency’s crypto policies in a May 19 speech, signaling a potential shift in regulatory approach. Peirce, known for her crypto-friendly stance, highlighted that the SEC’s methods have strayed from sound regulatory practices. She argued that while some crypto assets might be part of investment contracts, the majority do not qualify as securities. Her comments suggest an emerging recognition within the SEC that nuanced regulation is necessary, echoing sentiments from a crypto coalition’s assertion that staking is an ‘essential good’.
A Long Road of Legal Battles
The backdrop to Ripple’s recent assertions is its prolonged legal struggle with the SEC, dating back to 2020. The SEC’s former chair, Gary Gensler, had been a staunch advocate for classifying most digital assets as securities, a position that led to a fierce courtroom skirmish with Ripple. The lawsuit accused Ripple of conducting unregistered securities offerings through XRP sales. However, the tides began to turn after the election of President Donald Trump, with Ripple gaining ground in its defense.
In a pivotal court decision, a judge ruled that while Ripple’s institutional sales of XRP were indeed investment contracts, secondary sales were not. This nuanced ruling has bolstered Ripple’s argument and casts doubt on the SEC’s one-size-fits-all approach to crypto regulation. The SEC recently decided against appealing this ruling, marking a significant victory for Ripple and setting a precedent that could influence future cases.
What’s Next for Crypto Regulation?
The current climate raises intriguing questions about the future direction of crypto regulation in the United States. Ripple’s triumph in court and its recent letter to the SEC might catalyze a reevaluation of how digital assets are categorized. With influential figures like Peirce advocating for change, the SEC could be on the brink of a regulatory overhaul that aligns more closely with the evolving nature of the crypto market.
Yet, the path forward remains fraught with uncertainty. While Ripple’s case represents a landmark moment, it does not establish a comprehensive legal precedent for the broader industry. The debate over what constitutes a security in crypto is far from over, and market participants are keenly observing how regulators will adapt to these challenges.
In conclusion, Ripple’s recent actions underscore the ongoing battle between innovation and regulation in the crypto world. The outcome of this struggle will likely shape the future of digital assets, with significant implications for investors, developers, and regulators alike. As the saga unfolds, one thing is clear: the conversation around crypto regulation is only getting started.
Source
This article is based on: Fungible cryptos in secondary sales are not securities, Ripple tells SEC
Further Reading
Deepen your understanding with these related articles:
- The SEC Can Learn From the IRS in Making Regulation Simpler for Crypto
- UK’s FCA Seeks Public and Industry Views on Crypto Regulation
- U.S. Congress Braces for Intense Debate Over Crypto Legislation This Summer (openai)
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
