The U.S. Securities and Exchange Commission (SEC) has decided to drop its appeal in the Ripple case, marking a significant moment for the crypto industry.
The U.S. Securities and Exchange Commission (SEC) has decided to drop its appeal in the Ripple case, marking a significant moment for the crypto industry. After years of legal battles, the SEC's decision not to appeal the 2023 ruling by U.S. District Judge Analisa Torres brings clarity to the issue of whether XRP, the cryptocurrency issued by Ripple, is a security. The ruling stated that Ripple's "programmatic sales" of XRP via secondary exchanges like Coinbase and Kraken did not violate securities laws. However, direct sales of XRP to institutional investors were deemed securities violations, resulting in a $125 million fine for Ripple.
Samson Enzer, a partner at Cahill Gordon & Reindel LLP, highlighted the importance of the Ripple case. Unlike other dropped cases, such as those against Coinbase and Kraken, which were in the early stages, Ripple's case had progressed further, covering larger legal issues. Enzer noted that this dismissal could have more impact on the crypto industry since it set a broader legal precedent.
With the legal battle over, attention now turns to the possibility of an XRP exchange-traded fund (ETF). Multiple firms, including Grayscale, WisdomTree, and Bitwise, have filed for XRP ETFs, and there is growing optimism within the industry that the SEC will approve one soon. Prediction platform Polymarket shows an 80% chance of an XRP ETF being approved this year. Ripple CEO Brad Garlinghouse expressed confidence, stating that he believes the SEC will approve an XRP ETF in the second half of 2025.
Enzer believes the shift in the SEC's approach to crypto could pave the way for more crypto-related products, including ETFs. He added that secondary market sales of cryptocurrencies like XRP are now considered commodities or property, meaning exchanges will not need to register to trade these assets. He emphasized that the SEC's decision not to appeal the ruling was a huge development for the crypto industry, marking the end of years of litigation on the matter.
However, the SEC's stance on direct sales of XRP to institutional investors still stands. Ripple will retain $50 million of the $125 million fine for these violations. Meanwhile, state-level enforcement of crypto regulations could still occur, especially if fraud or market manipulation is involved.
The SEC's actions under new leadership suggest a shift toward a more cooperative approach with the crypto industry, and some expect the regulatory environment for digital assets to become more flexible. While there may still be enforcement at the state level, Enzer noted that the federal government seems to be moving in a more positive direction for the crypto market.
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