SEC vs. Ripple - The War is Not Over, Agency Plans to Appeal

Ripple may have won the partial ruling, but the war is not over, as SEC might appeal against the decision that XRP is not a security. The financial watchdog of the United States, the Securities and Exchange Commission (SEC), already petitioned an interlocutory appeal after the ruling.

SEC Plans to Appeal Against Ripple Ruling

In July 2023, Judge Analisa Torres of the United States District Court for the Southern District of New York (SDNY) passed a partial verdict that Ripple’s token XRP is not a security. But the SEC has petitioned Judge Torres to certify its interlocutory appeal before the case’s conclusion.

As per the September 1, 2023 filing, Ripple said that the regulating agency is “now rushing to appeal what it claims is a purely ‘legal question’ applicable to every digital-asset case.” It should be known that the previous ruling had rejoiced the crypto community, and many considered it a massive win for the industry.

SEC agrees that Ripple’s programmatic sale of its token XRP does not violate United States securities laws. It is because the retail investors bought the asset via an exchange, but had an institutional investor would have purchased XRP directly from Ripple, it would have been a problematic scenario.

The SEC takes precise aim at the sale of XRP and not the token. SEC believes that the methodology used to sell XRP makes it fall under the definition of securities. Moreover, it says that XRP is nothing more than a computer code, but its sale in return for some yield makes it a security.

SEC is Secretly Winning the Game

The war between SEC and Ripple has been brewing since December 2020. At the time, the regulator sued the crypto entity claiming that its token XRP is a security. The crypto community has kept a keen eye on the case, as it can potentially alter the crypto industry’s demography.

After the FTX-saga and similar events, the regulatory action against the crypto entities surged 183%. Experts think that the current action is mainly against the crypto industry. Moreover, the lawsuits against Coinbase and the naming of select tokens to be rebranded as securities paint a bad image of the agency.

Market experts have mixed reviews on whether the SEC would appeal or not. Moreover, if the agency appeals the ruling, it would lengthen the case indefinitely. It might give time for the agency to find other arguments, but it could also clarify the ambiguous definition of security.

Possible Road Ahead

If the ruling is challenged, the SEC must define securities and how Ripple violated the law. This scenario would bring a clear definition and might serve as clear guidelines for the crypto industry. The current obscurity benefits the agency by filing lawsuits and policing other crypto entities.

To clear the crypto regulatory void in the United States, lawmakers are working on four different bills. The Financial Innovation and Technology for the 21st Century Act (FITCA), The Digital Asset Market Structure Bill (DAMS), The Responsible Financial Innovation Act (RFIA), and the Digital Commodity Exchange Act (DCEA).

Experts agree that America is late to the party for crypto regulation, but these are positive steps taken by the country. If passed, these bills could change the demography of the crypto industry in the United States.