XRP News Today: Ripple Defends XRP in New SEC Letter Amid Regulatory Heat Over Security Claims

The filing, submitted on May 27 to the SEC’s Crypto Task Force, directly responds to Commissioner Hester Peirce’s recent remarks questioning how and when a digital asset separates from an investment contract. Ripple’s move signals its continued effort to shape crypto regulation while reinforcing XRP’s legal standing in the broader securities debate.

Ripple sent a four-page letter to the SEC’s Crypto Task Force, directly addressing concerns raised in Commissioner Hester Peirce’s recent “New Paradigm” speech. In her remarks, Peirce questioned when a crypto asset, initially distributed as part of an investment contract, ceases to be considered a security.

Ripple sent a letter to the SEC addressing when a digital asset separates from an investment contract. Source: Stuart Alderoty via X

Ripple’s letter, shared by Chief Legal Officer Stuart Alderoty on social media, positions XRP as a leading example of such separation. The firm reaffirmed that most fungible crypto assets, including XRP in secondary market sales, should not be classified as securities under current U.S. law.

“There is no current basis in the law relating to ‘investment contracts’ to classify most fungible crypto assets as ‘securities’ when transferred in secondary transactions,” the letter quoted from a 2022 legal paper by Lewis Cohen, a widely cited authority on crypto law.

Ripple’s latest legal stance outlines a straightforward framework for identifying when a digital asset has “severed” from any associated investment contract. According to Ripple, a secondary sale of a token should not be treated as a securities transaction unless two conditions are met:

1. A material promise to the original buyer remains unfulfilled.

2. The current holder possesses enforceable rights linked to that promise.

The company emphasized that vague statements or promotional “puffery” should not constitute such enforceable promises. Ripple said its approach aligns with Judge Analisa Torres’ July 2023 ruling in the XRP lawsuit, which held that XRP is not inherently a security, even though some early institutional sales were deemed investment contracts.

Ripple argued that ambiguous standards like “fully functional” or “sufficiently decentralized,” often cited by the SEC, lack clarity and pose risks to innovation. Instead, it called on Congress—not the SEC—to provide definitive guidance on such matters.

Ripple submitted a letter to the SEC addressing when a token should no longer be classified as a security. Source: JackTheRippler via X

“If there are regulatory gaps, it’s Congress’s—not the SEC’s—responsibility to close them,” the letter stated, pushing back on the agency’s expansive interpretations.

The company also advocated for a time-bound safe harbor rule, protecting blockchain projects in their early stages of development. Ripple believes that using network maturity as a criterion, rather than decentralization metrics, offers a more practical regulatory benchmark.

Ripple’s arguments were bolstered by its partial court victory in 2023, where the judge ruled that XRP itself is not a security. The SEC’s subsequent appeal was withdrawn, marking a major shift in the Ripple lawsuit timeline. While a proposed settlement to resolve Ripple’s institutional sales liability has been submitted, court approval remains pending.

Ripple proposed a Token Maturity Framework to the SEC, aiming to clarify when a crypto asset like XRP is no longer a security. Source: Ripplexity via X

This move is seen as part of Ripple’s broader strategy to cement XRP’s regulatory clarity ahead of the SEC’s upcoming digital asset conference. The fresh communication from Ripple comes at a time when industry players are urging the agency to adopt more practical rules for the growing crypto sector.

The letter has sparked conversation across the Ripple market and among supporters of Ripple crypto, as it reaffirms the company’s commitment to challenging what it views as outdated and overreaching securities regulation.

XRP was trading at around $2.28, down 0.63% in the last 24 hours at press time. Source: XRP Liquid Index (XRPLX) via Brave New Coin

Commissioner Peirce herself admitted that the current regulatory model is flawed, stating, “Most currently existing crypto assets in the market are not securities.” Ripple seized on this sentiment, positioning XRP as a case study for legal separation from investment contracts under its proposed test.

With renewed calls for a legislative solution and judicial precedent in its favor, Ripple appears determined to lead the charge for crypto clarity in the U.S.

While regulatory headlines continue to drive sentiment, the XRP price remains sensitive to legal developments. Traders are watching closely for signals from the SEC or the court that could influence XRP value in the coming weeks. Analysts believe that further regulatory clarity could support upward movement in the Ripple currency price, especially if broader crypto market conditions align.

Although the letter doesn’t directly impact immediate price action, it adds weight to Ripple’s long-term strategy of positioning XRP as a compliant, utility-driven digital asset.