Ripple’s Hilarious Quest for Clarity: When Does a Token Stop Being a Security?

by

Ah, Ripple, the brave knight of the crypto realm, has penned yet another missive to the SEC Crypto Task Force, following the illustrious Commissioner Hester Peirce’s grandiloquent “New Paradigm” speech. One can only imagine the drama unfolding in the hallowed halls of regulation! 🎭

In this letter, Ripple dares to tackle the burning question: how does a digital asset, once shackled to the chains of an investment contract, break free and declare its independence? It’s like watching a caterpillar transform into a butterfly, but with more legal jargon! 🦋

Ripple boldly asserts that most fungible crypto assets are not securities when they dance on the secondary market, as they lack the oh-so-important legal relationship that defines a security. Who knew trading could be so liberating? 💃

Our San Francisco-based hero cites the wise Judge Torres’s 2023 ruling in the SEC v. Ripple saga, which proclaimed that XRP itself is not a security. However, some institutional sales were still branded with the dreaded “security” label. Talk about a mixed bag! 🎭

Ripple, in its infinite wisdom, has called upon congressional lawmakers to fill the gaping legal voids. They’ve taken a jab at the SEC’s past reliance on vague standards, demanding clear guidance based on the existing law. Because, you know, clarity is so overrated! 🙄

it shouldn’t mean that digital asset transactions are suddenly under the watchful eye of securities laws. Because who wants that headache? 🤕

In a stroke of genius, Ripple proposes a “maturity” test to determine when an asset is no longer part of an investment contract. This test would consider market value thresholds and the time a network remains open and permissionless. And let’s not forget, no one should have unilateral control over the network’s core functionality. Because sharing is caring, right? 🤝

Read More

2025-05-28 09:25