TLDR
- Ripple filed a 20-page comment letter on October 20 supporting the SEC’s proposed Regulation Crypto Assets.
- The company says an investment contract can be a security without making the token itself a security.
- Ripple opposes using decentralization as a separate legal test and wants regulators to focus on issuer promises.
- It is asking for clearer rules on Form TR filings, secondary-market trading and treatment across federal securities laws.
- Ripple says its earlier legal fight with the SEC over XRP cost more than $150 million.
Ripple has asked the U.S. Securities and Exchange Commission to adopt its proposed Regulation Crypto Assets. The company says clear rules could help crypto firms avoid long and costly court fights over whether their tokens are securities.
Ripple filed a 20-page comment letter on October 20. The letter supports the SEC’s proposed exemptions for some crypto offerings, but it also asks for several changes.
Ripple Chief Legal Officer Stuart Alderoty confirmed the filing in a post on X. He said the company’s past fight with the SEC cost more than $150 million and that businesses should not need years in court to learn their legal duties.
Ripple Rejects Decentralization as a Legal Test
Ripple’s main argument separates a digital asset from the investment contract used to sell it. The company says an investment contract can be a security without making the token a security.
This view relies on the Supreme Court’s Howey test, which looks at the details of an investment arrangement.
Under the SEC’s proposal, an investment contract could end once the issuer finishes or permanently stops the key managerial work it promised investors. The issuer also could not make new promises of that kind.
Ripple supports this approach. However, it opposes making decentralization a separate legal requirement.
The letter says decentralization can be measured in many ways, such as governance, node distribution, software work and economic control. Ripple says these measures cannot reliably show whether an issuer’s promises are still in effect.
Instead, Ripple wants regulators to look at what an issuer clearly promised investors and whether those promises were kept or withdrawn.
SEC Proposal and Ripple’s Requested Changes
The SEC released Regulation Crypto Assets in August. It proposes two registration exemptions for qualifying crypto investment contracts.
One would let eligible startups raise up to $5 million over four years. Another would allow offerings of up to $75 million within 12 months, with extra disclosure and financial reporting rules.
The draft also includes a safe harbor for deciding when a token is no longer tied to an investment contract. Galaxy Research has estimated that hundreds of token issuers could eventually use this process.
Ripple wants more certainty around Form TR, a proposed filing showing an issuer has finished its key managerial work. It says exchanges and brokers should be able to rely on a properly filed form.
Ripple also wants tokens separated from investment contracts to be treated the same way under four federal securities laws. It has asked for clearer guidance on secondary-market trading under Rule 500.
Hyperliquid’s policy group has sent separate recommendations on token trading, airdrops and buybacks.
In July 2023, a federal judge ruled that XRP itself was not an investment contract, while treating different types of XRP sales differently. Ripple’s letter notes that Coinbase and Kraken restored XRP trading for U.S. customers after the ruling.
The letter also says the U.S. share of global crypto developers fell from 38% in 2015 to 19% in 2024. Ripple says its own U.S. hiring doubled in 2024 compared with 2023.
The public comment deadline for Regulation Crypto Assets was October 20. The SEC will now review the comments and may revise the proposal before adopting any final rule.
