XRP
Ripple has formally endorsed the U.S. Securities and Exchange Commission’s proposed Regulation Crypto Assets framework, supporting a new approach that would allow qualifying cryptocurrency issuers to raise up to $75 million annually without completing traditional securities registration. In a submission dated October 20, the company urged the SEC to refine provisions governing token classification, the termination of investment contracts and secondary-market transactions.
The position marks a shift in Ripple’s relationship with the regulator following years of litigation over XRP sales. Ripple Chief Legal Officer Stuart Alderoty argued that the SEC’s previous reliance on case-by-case enforcement created regulatory uncertainty, constrained legitimate businesses and encouraged cryptocurrency innovation to move outside the United States. The company’s support for a formal rulemaking process indicates a preference for clearer, industry-wide standards over regulatory decisions driven primarily by individual enforcement actions.
The SEC introduced its Regulation Crypto Assets proposal on August 18, outlining two potential exemptions from traditional securities registration for qualifying cryptocurrency-related investment contracts. The startup exemption would permit eligible companies to raise up to $5 million over four years, while a separate fundraising exemption would allow up to $75 million within a 12-month period.
The larger exemption includes a $20 million Tier 1 pathway and a $75 million Tier 2 pathway. Both exemptions would require principles-based investor disclosures, with the higher fundraising tier carrying additional financial reporting obligations. Federal antifraud and antimanipulation provisions would remain applicable, meaning the proposed framework would reduce certain registration requirements without removing broader investor-protection obligations.
For cryptocurrency companies, the distinction is material. If adopted, the exemptions could provide qualifying issuers with more structured routes to raise capital while reducing some of the costs associated with traditional securities registration. However, access to the exemptions would depend on the final rules and their eligibility conditions, and the proposal would not create a blanket exemption for all token offerings.
A central element of the framework is a conditional safe harbor under which a cryptocurrency could cease to be associated with an investment contract after the issuer completes or permanently ends the essential managerial efforts it had promised. Ripple supports this approach under the Supreme Court’s Howey test, arguing that securities-law treatment should focus on the investment contract surrounding a cryptocurrency rather than automatically treating the underlying token itself as a security.
That distinction is particularly relevant to secondary-market activity. A token may initially be distributed through an arrangement involving promises of managerial or entrepreneurial efforts, while subsequent transactions may occur under different circumstances. Clearer rules for determining when the original investment contract has ended could help exchanges, brokers and other intermediaries assess their regulatory obligations when supporting trading in the asset.
Ripple is seeking additional clarification on how issuers would demonstrate that an investment contract has terminated. Specifically, the company argues that issuers should not automatically be required to submit a Form TR to establish that the relevant investment contract has ended. It also wants exchanges, brokers and other intermediaries to be able to rely on completed Form TR filings when determining whether an asset remains subject to securities requirements.
The proposals address a practical question for digital-asset markets: how regulatory status should be communicated and verified after an issuer’s contractual or managerial obligations change. Without a sufficiently clear process, intermediaries could face uncertainty over whether they can continue supporting an asset, potentially complicating listings and secondary-market access. Ripple’s recommendations seek to make that determination more consistent, although their effect would depend on the SEC’s final approach.
The company also wants the safe harbor’s treatment of crypto assets extended to the Investment Company Act and Investment Advisers Act. Its position is that inconsistent classifications across federal securities laws could create additional compliance burdens even where an asset no longer meets the relevant investment-contract conditions. A more coordinated framework could reduce those inconsistencies, but the scope of any relief would need to be established through the final rules.
Another point of contention concerns state-registration preemption. Ripple opposes excluding ordinary broker-dealer transactions from the proposed protections, warning that such restrictions could discourage regulated intermediaries from providing secondary-market liquidity. The issue matters because clearer issuer-level rules may have limited practical value if intermediaries remain uncertain about their own registration obligations when facilitating transactions.
Ripple’s position is shaped in part by its own SEC litigation, which distinguished institutional XRP sales from transactions in which buyers did not acquire the same investment-contract rights. That history provides context for the company’s emphasis on separating a token from the specific arrangements through which it is offered or sold. However, the proposed framework’s broader significance would extend beyond XRP, potentially affecting how qualifying digital-asset offerings and subsequent transactions are treated.
The regulatory discussion also coincides with a separate development involving XRP’s identity and infrastructure. On October 19, Ripple and the XRP Ledger Foundation established an official XRP account identifying XRP as the native asset of the independently operating XRP Ledger. While distinct from the SEC submission, the development reinforces the importance of distinguishing the asset itself, the network on which it operates and the legal arrangements associated with its distribution.
Ripple is not alone in seeking changes to the proposal. The Blockchain Association also endorsed the framework on October 20 but called for the startup exemption to increase from $5 million to $10 million. The industry group argued that blockchain development, infrastructure and security expenses can exceed the proposed ceiling. It also recommended excluding qualifying airdrops and network participation rewards from fundraising limits, contending that distributions intended to support network activity should not reduce the capital available under the exemption.
The competing recommendations highlight a broader policy challenge: designing exemptions that facilitate legitimate capital formation without weakening investor protections or creating opportunities to circumvent securities requirements. A higher startup ceiling could give early-stage projects more funding flexibility, while excluding certain network distributions could preserve fundraising capacity. Conversely, the final rules would need clear eligibility criteria to determine which activities qualify for relief.
For digital-asset markets, the immediate focus is the SEC’s response to these recommendations and the final structure of Regulation Crypto Assets. The key questions include whether the agency will adopt a workable process for determining when an investment contract has ended, permit intermediaries to rely on that determination, align treatment across federal securities laws and preserve consistent protections for secondary-market transactions.
The proposal has not yet established a final regulatory regime. Until the SEC resolves these issues, cryptocurrency issuers and market intermediaries will continue to face uncertainty over the conditions under which capital can be raised and assets can be traded. The eventual rules could influence the cost of fundraising, the compliance requirements for exchanges and brokers, and the ability of qualifying digital-asset businesses to operate within the United States.
