Ripple, the blockchain company behind XRP, argued that fungible cryptocurrencies are not securities when transferred in secondary transactions in a recent letter sent to the US Securities and Exchange Commission (SEC).
In its May 27 letter, Ripple cited US attorney and crypto law thought leader Lewis Cohen to support its claim. In his widely cited 2022 paper, “The Ineluctable Modality of Securities Law: Why Fungible Crypto Assets Are Not Securities,” he wrote:
“[T]here is no current basis in the law relating to ‘investment contracts’ to classify most fungible crypto assets as ‘securities’ when transferred in secondary transactions.”
In his paper, Cohen explained that in secondary transactions, an investment contract transaction is generally not present. He further claimed that fungible cryptocurrencies “neither create nor represent the necessary cognizable legal relationship between” a legal entity and the holder that is the “hallmark of a security.”
Ripple also referenced SEC Commissioner Hester Peirce’s May 19 “new paradigm” speech. She said she’d been voicing her dissent with the regulator’s approach to crypto, adding:
“Having emerged from the crypto dissent years, I am glad to be able speak to you today as the head of the Commission’s Crypto Task Force about a rational and coherent path forward and a new paradigm at the SEC.”
Peirce said that the SEC’s “approach to crypto in recent years has evaded sound regulatory practice and must be corrected.” She also said that most cryptocurrencies are not securities, adding:
“Most currently existing crypto assets in the market are not [securities]. My supplemental answer is that economic realities matter and non-security crypto assets may be distributed as part of an investment contract, which is a type of security.”
Ripple’s long fight with the SEC
The SEC had viewed a large portion of digital assets as securities, with the regulator’s former chair, Gary Gensler, stating in 2023 that most of the crypto market falls under the securities bracket. This stance led to a protracted legal battle between the SEC and Ripple.
The lawsuit first began at the end of 2020, when the SEC took action against Ripple and its executives, claiming that XRP sales constituted unregistered security offerings. Still, after the government’s stance on crypto changed with the election of current US President Donald Trump, Ripple has mostly won the battle, with the SEC recently dropping its appeal against a ruling favorable to the company.
In its recent letter to the SEC, Ripple also cited a ruling in the case noting that “the court held that certain of Ripple’s historical institutional sales of XRP were investment contracts,” while the secondary sales were not. Furthermore, the judge “determined that XRP itself is not a security.”
When TV cameras are let in to film world leaders meeting in person, the resulting footage is usually incredibly boring for journalists and incredibly safe for politicians.
Put through a total of almost 90 minutes of televised questioning alongside the American leader, it was his diciest encounter with the president yet.
But he still just about emerged intact.
For a start, he can claim substantive policy wins after Trump announced extra pressure on Vladimir Putin to negotiate a ceasefire and dialled up the concern over the devastating scenes coming from Gaza.
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There were awkward moments aplenty though.
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Image: The two leaders held talks in front of the media. Pic: Reuters
On green energy, immigration, taxation and online regulation, the differences were clear to see.
Sir Keir just about managed to paper over the cracks by chuckling at times, choosing his interventions carefully and always attempting to sound eminently reasonable.
At times, it had the energy of a man being forced to grin and bear inappropriate comments from his in-laws at an important family dinner.
But hey, it stopped a full Trump implosion – so I suppose that’s a win.
My main takeaway from this Scotland visit though is not so much the political gulf present between the two men, but the gulf in power.
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Sir Keir flew the length of the country he leads to be the guest at the visiting president’s resort.
He was then forced to sit through more than an hour of uncontrolled, freewheeling questioning from a man most of his party and voters despise, during which he was offered unsolicited advice on how to beat Nigel Farage and criticised (albeit indirectly) on key planks of his government’s policy platform.
In return he got warm words about him (and his wife) and relatively incremental announcements on two foreign policy priorities.
So why does he do it?
Because, to borrow a quote from a popular American political TV series: “Air Force One is a big plane and it makes a hell of a noise when it lands on your head.”
With Amazon and Walmart exploring stablecoins, institutions may be underestimating potential exposure of customer data on blockchains, posing risks to privacy and brand trust.
The European Central Bank may rely on regulated euro stablecoins and private innovation to counter the dominance of US dollar stablecoins, says adviser Jürgen Schaaf.