Ripple Challenges SEC: Demands Clarity on Crypto's Security Status

Ripple's Bold Move

Ripple isn't holding back. In a fiery letter sent to the SEC's Crypto Task Force, they're demanding straight answers on when a digital asset sheds its investment contract label. This isn't just a polite request—it's a call to action!

The Public Stance

On May 28, Ripple's chief legal officer, Stuart Alderoty, threw down the gauntlet by sharing the letter publicly. It's a direct response to SEC commissioner Hester Peirce's provocative "New Paradigm" speech. The burning question? When does a crypto asset stop being treated as a security? Ripple's not messing around—they want a clear-cut answer.

Legal Grounds

Ripple's not pulling punches. They're leaning on solid legal analysis, like the 2022 paper, "The Ineluctable Modality of Securities Law," which argues that most crypto assets traded on secondary markets shouldn't be slapped with the security label. Why? Because they don't come with ongoing obligations between buyers and the original issuers.

Courtroom Clashes

And let's not forget the 2023 ruling in SEC vs. Ripple Labs. The court said XRP isn't automatically a security—only some early institutional sales qualified as investment contracts. Ripple's using this to hammer home their point: the law's on their side.

A Clear Test

Ripple's laying down the law with a proposed legal test. They say a digital asset should be free from the investment contract unless two conditions are met: the issuer's made promises they haven't kept, and the current holder has rights against them. It's a no-nonsense approach that could shake up the regulatory landscape.

Regulatory Reforms

This isn't just about Ripple—it's about the whole market. Their letter pushes for rules that protect the good guys without giving the bad ones a free pass. "A sound safe harbor should operate within, not expand, the existing scope of federal securities law," they declare. And they're not buying into vague ideas like "sufficient decentralization." They want hard criteria: network maturity, public trading history, and no unilateral control.

The Battle Continues

As Ripple and the SEC gear up for the final showdown in their ongoing legal saga, tensions are high. A settlement proposal was shot down by Judge Analisa Torres on May 15 for procedural reasons, but both sides are ready to come back swinging. This isn't over yet—Ripple's fighting for clarity, and they're not backing down.