The price of XRP, the native token of Ripple, soared more than 75% on July 13 after a federal judge ruled against the United States Securities and Exchange Commission’s (SEC) contention that XRP is a security.
The ruling by U.S. District Judge Analisa Torres of the Southern District of New York granted summary judgment in favor of Ripple Labs on three out of four issues, finding that in certain scenarios, the XRP token is not a security.
The ruling is a major victory for Ripple, which has been locked in a legal battle with the SEC since December 2020. The SEC had accused Ripple of selling XRP as an unregistered security, but Torres’ ruling found that XRP is not a security under the Howey test, which is the legal standard for determining whether an investment contract is a security.
The ruling sent XRP’s price soaring, with the token briefly hitting a one-year high of $0.93. Other tokens that had been delisted by major exchanges over concerns that they could be unregistered securities also rallied, with XLM, the native token of Stellar, rising more than 70%.
The SEC has not yet commented on the ruling, but it is likely to appeal the decision. However, the ruling is a major setback for the SEC’s enforcement actions against crypto-focused companies, and it could have implications for the SEC’s multi-year resistance to approving a spot Bitcoin ETF.
Analysts Weigh In
A number of analysts have weighed in on the ruling, with some suggesting that it could have a significant impact on the crypto industry.
“This is a huge win for Ripple and the crypto industry as a whole,” said Jake Chervinsky, head of policy at the Blockchain Association. “The ruling makes it clear that the Howey test is not a one-size-fits-all standard for determining whether a digital asset is a security, and it opens the door for other projects to challenge the SEC’s enforcement actions.”
“The SEC’s loss in this case is a major blow to its efforts to regulate the crypto industry,” said John Reed Stark, former chief of the SEC’s Office of Internet Enforcement. “The ruling makes it clear that the SEC cannot simply label any digital asset a security and use its enforcement powers to shut down innovation.”
The ruling is a significant victory for Ripple, but it remains to be seen how the SEC will respond. The SEC could appeal the ruling, or it could change its approach to regulating the crypto industry. However, the ruling is a major setback for the SEC, and it is likely to have a significant impact on the crypto industry.