SEC’s Consideration of XRP as a Commodity
The US Securities and Exchange Commission (SEC) is currently exploring the classification of XRP as a commodity rather than a security in its ongoing negotiations with Ripple.
Similarities Between XRP and Ethereum
According to journalist Charles Gasparino, the SEC is drawing parallels between XRP and Ethereum (ETH), with the agency viewing Ethereum as a commodity despite its initial issuance through an ICO.
Gasparino stated, “ETH was obviously issued as an ICO; its characteristics on issuance was no different than XRP — both used to finance the buildout of a platform, yet Ripple got sued and Ethereum didn’t because ETH had since morphed into a commodity. What is being discussed now is the comparison between the 2 cryptos.”
Impact on Ripple Lawsuit
The commission’s assessment of XRP’s trading utility and market function could play a pivotal role in determining the outcome of its lawsuit against Ripple, potentially leading to a settlement.
Legal Developments
The SEC filed a lawsuit against Ripple in December 2020, alleging an unregistered securities offering through the sale of XRP. However, a ruling in August 2023 differentiated between Ripple’s institutional and retail sales, resulting in a $125 million penalty and a permanent injunction on institutional sales of XRP.
Potential Settlement
Recent reports indicate that the case is nearing resolution, with discussions focused on aligning the terms with evolving regulatory perspectives on crypto. Ripple’s legal team is advocating for reduced penalties, citing the SEC’s changing stance on crypto enforcement.
Challenges for Ripple
Ripple may face challenges if it accepts a settlement that conflicts with its future plans for exempt securities offerings or an IPO. The SEC’s reevaluation of XRP’s classification could have broader implications for crypto regulation.
