EddieJayonCrypto
28 May 25
Ripple responded to the SEC Crypto Task Force following Commissioner Hester Peirce’s "New Paradigm" speech, addressing when a digital asset initially sold as part of an investment contract ceases to be a security. Ripple argues that most fungible crypto assets are not securities on secondary markets...
Ripple’s recent letter to the SEC Crypto Task Force advocates for a clear legal framework regarding when fungible crypto assets cease to be securities upon secondary market trading. The company emphasizes adopting a "maturity" test to establish when digital assets detach from their initial investment contracts, promoting legal certainty and market clarity.Responding to Commissioner Hester Peirce’s “New Paradigm” speech, Ripple argues that most fungible crypto assets should not be classified as securities once traded on secondary markets, because the crucial legal relationship defining securities no longer applies. They highlight Judge Torres’s 2023 ruling in SEC v. Ripple, which found that XRP itself is not a security, while acknowledging that some institutional sales were deemed securities.Ripple calls on Congress to close existing legal gaps and criticizes the SEC’s reliance on vague standards, urging clearer guidance rooted in established law. The firm proposes that a digital asset be considered separate from its investment contract unless material promises from the original contract remain unfulfilled or enforceable rights persist.The letter also supports a safe harbor provision for good-faith actors, but stresses this should not mean all digital asset transactions automatically fall under securities regulations. Additionally, Ripple introduces a "maturity" test involving criteria such as market value thresholds, network openness and permissionless status, and absence of unilateral control over core network functions, to effectively determine when an asset is no longer governed by securities laws.In sum, Ripple’s stance offers a pathway to demystify the legal status of cryptocurrencies post-initial sale, seeking regulatory clarity vital for market innovation and investor confidence.