Ripple has sent a follow-up letter to the SEC’s Crypto Task Force, responding to Commissioner Hester Peirce’s recent “New Paradigm” speech. In the letter, the company requests clear guidance on a critical legal issue: when does a digital asset, initially sold under an investment contract, stop being classified as a security?
Ripple Cites Court Ruling on XRP Status
The San Francisco-based company pointed to the 2023 ruling by Judge Analisa Torres in the SEC v. Ripple case. In that decision, the court determined that XRP itself does not qualify as a security, though some institutional sales did. Ripple argues that this ruling supports the broader idea that most fungible crypto assets, once trading on secondary markets, lose their status as securities due to the absence of a continuing legal relationship.
Ripple emphasized that the SEC should not continue relying on vague and inconsistent standards. Instead, the company insists the agency should apply existing laws to provide clearer and fairer rules for crypto companies. According to Ripple, a digital asset should be treated as separate from its original investment contract unless the issuer made a material promise that remains unfulfilled or the current holder still has legal rights to enforce that promise.
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Ripple added that delivering a token or making broad, non-specific statements should not qualify as a binding legal commitment. This clarification, they argue, would help eliminate unnecessary regulatory confusion.
Ripple Pushes for “Maturity” Test and Safe Harbor Protections
To establish a consistent regulatory approach, Ripple proposed a “maturity” test. This test would determine when a digital asset no longer functions as part of an investment contract. Criteria for the test would include the asset’s market value and the length of time a blockchain network has operated in an open and permissionless manner. Furthermore, Ripple stated that no single entity should hold unilateral control over the network’s core functionality.
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In addition, Ripple advocated for a safe harbor provision to protect actors operating in good faith. However, the company clarified that this protection should not automatically subject digital asset transactions to securities laws. Instead, Ripple believes such a provision should offer clarity without expanding regulatory overreach.
Finally, Ripple called on lawmakers to address the remaining legal uncertainties in the digital asset market. The company stressed that clear, enforceable standards are essential for market participants and innovation. Through this push for clarity, Ripple continues its fight for fairer treatment of crypto assets and a more predictable regulatory environment.
