Key Takeaways
- • Ripple endorsed the SEC's proposed 'Regulation Crypto Assets' in a 20-page comment letter sent October 20, urging the regulator to proceed with the rulemaking.
- • The SEC's August proposal would create two registration exemptions: up to $5 million raised over a four-year period for qualifying crypto projects, and up to $75 million raised per year under the second exemption.
- • Ripple argues the SEC already has legal authority to adopt the rules and that the proposal follows the Supreme Court's Howey framework.
- • Ripple criticizes the SEC's case-by-case, coin-by-coin enforcement approach and rejects decentralization as a core test for whether a token is a security.
- • The proposal would add a conditional safe harbor for digital assets that have ceased to be investment contracts.
Summary
Ripple has endorsed the U.S. Securities and Exchange Commission's proposed 'Regulation Crypto Assets', calling on the regulator to substantially change how cryptocurrencies are regulated in the United States. On October 20, the blockchain firm sent a comment letter to the SEC urging it to proceed with the proposal. Ripple contends that regulatory uncertainty and years of policymaking through enforcement have pushed crypto innovation abroad.
Ripple's Chief Legal Officer Stuart Alderoty publicized the position on X, stating, "We are for this proposal. The SEC clearly has the authority to do it." He also criticized the 'case-by-case' and 'coin-by-coin' enforcement approach the agency has long used, arguing that the industry needs a clear set of rules to establish legal clarity.
In August, the SEC proposed two exemptions from the usual securities registration requirements. The first would apply to qualifying crypto projects raising up to $5 million over a four-year period. The second would allow up to $75 million to be raised each year. The proposal also introduces a conditional safe harbor for digital assets that have ceased to be investment contracts.
A central argument in Ripple's 20-page comment letter distinguishes the cryptocurrency itself from the investment contract through which it is sold. According to Alderoty, the proposal follows the framework set by the Supreme Court's Howey decision. Under this approach, a token would not remain within securities regulation permanently; its status depends on the sale within an investment contract and the specific promises made by the issuer, and those obligations may no longer apply once fulfilled.
Ripple also strongly objects to using decentralization as a core factor in determining whether a cryptocurrency is a security.
Ripple's Chief Legal Officer Stuart Alderoty publicized the position on X, stating, "We are for this proposal. The SEC clearly has the authority to do it." He also criticized the 'case-by-case' and 'coin-by-coin' enforcement approach the agency has long used, arguing that the industry needs a clear set of rules to establish legal clarity.
In August, the SEC proposed two exemptions from the usual securities registration requirements. The first would apply to qualifying crypto projects raising up to $5 million over a four-year period. The second would allow up to $75 million to be raised each year. The proposal also introduces a conditional safe harbor for digital assets that have ceased to be investment contracts.
A central argument in Ripple's 20-page comment letter distinguishes the cryptocurrency itself from the investment contract through which it is sold. According to Alderoty, the proposal follows the framework set by the Supreme Court's Howey decision. Under this approach, a token would not remain within securities regulation permanently; its status depends on the sale within an investment contract and the specific promises made by the issuer, and those obligations may no longer apply once fulfilled.
Ripple also strongly objects to using decentralization as a core factor in determining whether a cryptocurrency is a security.
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