Crypto Industry Celebrates XRP Court Ruling, but Long Road Ahead for Regulatory Framework

The cryptocurrency industry has been abuzz with excitement after a recent court ruling declared that Ripple‘s XRP token is not considered a security when sold on digital asset exchanges. 

The ruling has generated positive sentiment across the crypto ecosystem, offering hope for clarity in the regulatory landscape. 

Stuart Alderoty, chief legal officer at Ripple, has said that the most critical aspect of the ruling is the court’s explicit statement that XRP is not inherently a security, claiming that this ruling is now a matter of law, no longer up for debate or trial. 

“Additionally, other findings that are not subject to trial include the following: sales on exchanges are not securities, sales by executives are not securities, and other XRP distributions to developers, charities and employees are not securities,” he said in a recent interview. 

Although the XRP court ruling is a significant milestone for the crypto industry, Alderoty said it is far from the end. 

“There will be further court proceedings per the court’s order, and we’re evaluating next steps,” he said.

Recent Ruling Could Signal Some “Measures of Finality”

While many crypto pundits have rejoiced about Ripple’s recent partial win, others noted that the industry’s fight for regulatory clarity is likely far from over.

Preston Byrne, partner at Brown Rudnick and a crypto entrepreneur, said the SEC is currently reviewing the decision, claiming that the agency might challenge the ruling. 

“The Ripple summary judgment is obviously not the last word on the issue,” Byrne said in a recent tweet, noting that even if Ripple accepts the win, the firm still “got multi-billions of dollars in institutional sales that they’re on the hook for.”

At the end of the day, actual "token common law" in the United States is still pretty sparse, mainly consisting of a handful of District Court-level decisions of limited precedential value…

— Preston Byrne (@prestonjbyrne) July 13, 2023

However, in a recent blog post, law firm Holland & Knight stated that while interlocutory appeals are permitted, they are rarely granted in practice.

“Although the court’s grant of summary judgment on certain aspects of the case signal some measure of finality with regard to the SEC’s jurisdictional reach (or lack thereof), an appeal would be deemed interlocutory at this stage, as the court did not dispose of the case in its entirety,” the firm wrote.  

Therefore, if the SEC decides to appeal, the process could potentially take months or even years.

The Holland & Knight blog post also noted that Judge Torres explicitly declined to extend her opinion to secondary market sales of XRP or other tokens, leaving room for future conflicts. 

As reported, Ripple has recently applied for a crypto license in the UK and Ireland after its partial win against the US Securities and Exchange Commission.

Sendi Young, Ripple’s managing director for the UK & Europe, has revealed that the company “very recently” applied for crypto asset firm registration with the UK’s FCA, along with a payment institution license in Ireland.