Ripple Labs, the parent company of one of the largest and well-known cryptocurrencies, XRP, recently filed a response with the U.S. Securities and Exchange Commission (SEC) in response to the agency’s appeal of a ruling on whether its cryptocurrency is considered a security. Ripple has fought at great lengths to defend its claim that XRP is not a security, but just a decentralized digital asset with utility similar to Bitcoin, Ethereum, and other digital currencies.
In the most recent filing, Ripple’s attorneys argue that the District Court’s opinion—that XRP is a currency like Bitcoin or Ethereum—is correct and should be affirmed. Ripple makes the claim that it is not the type of asset that U.S. securities laws were designed to regulate, and the court’s earlier decision affirming that point is correct. Ripple also claims that the SEC is overstretching the scope of securities regulation in an attempt to regulate all digital assets as if they were securities.
Ripple’s response goes on to point out that, unlike some other digital assets, XRP has no centralized issuer, and therefore falls outside of the scope of traditional securities regulation. The filing also notes that XRP is held and traded by many people, suggesting a wide base of decentralized ownership.
The SEC’s appeal is an attempt to reinterpret the court’s ruling that the long-standing Howey test should not be used to determine whether XRP is asecurity or not. Ripple believes that such an attempt is unfounded and should be rejected. If the appeal is successful, Ripple’s XRP could become classified as a security, which could significantly alter the way in which digital assets are regulated and traded in the U.S.
