Ripple Urges SEC Not to Classify Tokens as Securities Indefinitely
Ripple Labs has sent a letter to the SEC, backing the agency’s with the argument that cryptocurrencies should not automatically be classified as securities because they were initially sold through investment contracts.In the letter shared on Tuesday, Ripple supported the SEC’s shift away from enforcement-driven regulation toward clear, binding rules, particularly after the Clarity Act failed to advance in the Senate.The key argument is that Ripple’s continued business growth, XRPL development and promotion of blockchain products should not automatically make XRP a security.Ripple wants this principle embedded in binding SEC regulations, potentially giving exchanges, institutions and investors more predictable legal treatment.Ripple argues an investment contract involving a cryptocurrency is the security, not necessarily the underlying token. It cites the XRP court ruling as support.A token should no longer be tied to an investment contract once an issuer fulfills, abandons or terminates the promises that created the investment relationship.Ripple’s Additional DemandsRipple urged the SEC to reject decentralization tests and company-backed token classifications, arguing that corporate support or blockchain development should not automatically make tokens securities.It also called for broader safe harbor protections under investment company and adviser laws, allowing exchanges to rely on Form TR filings and providing appropriate state-law preemption for secondary-market trading.A National Cryptocurrency Association study estimates that clearer crypto regulations could have brought 382–1,518 additional token offerings and $325 million–$1.12 billion in capital raised to the U.S. between 2022 and October 2026, largely by encouraging projects to raise funds domestically rather than overseas.Preview Image: Shutterstock