{"id":12518,"date":"2025-05-28T14:53:25","date_gmt":"2025-05-28T12:53:25","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=12518"},"modified":"2025-05-28T14:53:25","modified_gmt":"2025-05-28T12:53:25","slug":"ripple-asserts-that-crypto-secondary-sales-shouldnt-be-considered-securities-in-latest-challenge-to-sec","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/05\/28\/ripple-asserts-that-crypto-secondary-sales-shouldnt-be-considered-securities-in-latest-challenge-to-sec\/","title":{"rendered":"Ripple Asserts That Crypto Secondary Sales Shouldn\u2019t Be Considered Securities in Latest Challenge to SEC"},"content":{"rendered":"\n
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Ripple, the blockchain firm associated with XRP, contended that fungible cryptocurrencies should not be classified as securities during secondary transactions in a recent communication addressed to the US Securities and Exchange Commission (SEC).<\/p>\n

In its May 27 correspondence<\/a>, Ripple referred to US attorney and crypto law expert Lewis Cohen to bolster its assertion. In his frequently referenced 2022 study<\/a>, \u201cThe Ineluctable Modality of Securities Law: Why Fungible Crypto Assets Are Not Securities,\u201d he articulated:<\/p>\n

\u201c[T]here is no present foundation in the law regarding \u2018investment contracts\u2019 to categorize the majority of fungible crypto assets as \u2018securities<\/a>\u2019 when exchanged in secondary transactions.\u201d<\/p>\n

In his study, Cohen clarified that in secondary transactions, an investment contract exchange is typically not involved. Additionally, he argued that fungible cryptocurrencies \u201cneither establish nor symbolize the essential recognizable legal connection between\u201d a legal entity and the holder, which is the \u201cdefining characteristic of a security.\u201d<\/p>\n

Related: <\/strong><\/em>Banking groups urge SEC to abandon cybersecurity incident disclosure regulation<\/strong><\/em><\/a><\/p>\n

SEC\u2019s \u201cnew paradigm\u201d<\/h2>\n

Ripple additionally mentioned SEC Commissioner Hester Peirce’s May 19 \u201cnew paradigm\u201d address<\/a>. She noted her dissent regarding the regulator\u2019s methodology towards crypto, stating:<\/p>\n

\u201cHaving emerged from the crypto dissent years, I am pleased to be able to address you today as the leader of the Commission\u2019s Crypto Task Force regarding a logical and cohesive direction forward and a new paradigm at the SEC.\u201d<\/p><\/blockquote>\n

Peirce acknowledged that the SEC\u2019s \u201ctreatment of crypto in recent times has sidestepped proper regulatory practices and requires rectification.\u201d She further asserted that the majority of cryptocurrencies do not qualify as securities, adding:<\/p>\n

\u201cMost existing crypto assets in the market are not [securities]. My additional response is that economic realities are significant and non-security crypto assets may be distributed as part of an investment contract, which is a form of security.\u201d<\/p><\/blockquote>\n

Ripple\u2019s prolonged conflict with the SEC<\/h2>\n

The SEC has regarded a substantial portion of digital assets as securities, with the former chair, Gary Gensler, declaring in 2023 that most of the cryptocurrency market falls under the securities category<\/a>. This position incited an extended legal conflict between the SEC and Ripple.<\/p>\n

The litigation initially commenced at the close of 2020<\/a>, when the SEC initiated action against Ripple and its executives, asserting that XRP sales constituted unregistered security offerings. Nevertheless, after the government\u2019s perspective on crypto shifted with the election of the current US President Donald Trump, Ripple has largely triumphed in the dispute, with the SEC recently abandoning its appeal against a ruling favorable to the company<\/a>.<\/p>\n

In its latest letter to the SEC, Ripple also referenced a ruling noting that \u201cthe court determined that certain of Ripple\u2019s historical institutional sales of XRP were investment contracts,\u201d while the secondary sales were not. Further, the judge \u201cconcluded that XRP itself is not a security.\u201d<\/p>\n

Magazine: <\/strong><\/em>XRP victory leaves Ripple and the industry without established legal precedence for crypto<\/strong><\/em><\/a><\/p>\n