When the SEC sued in 2020, XRP fell about 70% within days. A 2023 court ruling then added roughly $21 billion, and exchanges relisted it.
Ripple filed a comment letter with the SEC, voicing support for the agency’s proposed Regulation Crypto Assets and urging it to finalize the rule.
As per the company, the proposal allows replacing years of regulatory uncertainty that worked on a case-by-case basis with an established framework of laws, all the while maintaining protection for investors under existing regulations.
What Ripple Wants the SEC to Keep and Change
The proposal’s core idea is that the investment contract, not the token, is the security. Stuart Alderoty, Ripple’s chief legal officer, called that faithful to Howey, the 1946 Supreme Court case that defines an investment contract, and wrote:
“What matters is what an issuer actually promised and when those promises end, not a subjective ‘decentralized’ test.”
Rule 400, a proposed safe harbor, would let an issuer file a public Form TR certifying that the work it promised buyers is finished or abandoned. Ripple opposes an SEC suggestion to limit it to issuers that fulfilled their promises, arguing that buyers can no longer expect profits from abandoned work either.
The letter also rejects sorting tokens into “company-backed” and “network” camps, warning that the split would revive the “implicit” promise standard the SEC dropped in its 2026 interpretation.
In one example, a company sending 5% of each sale to buy and burn its own token creates an investment contract, Ripple says, because the code automates a promise to return revenue to holders.
On authority, the letter points to Section 28 of the Securities Act and Section 36 of the Exchange Act, which let the SEC exempt “class or classes” of securities. A failed 49-50 Senate vote on September 15 to advance the Digital Asset Market Clarity Act removes none of that power, according to the filing.
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Ripple also wants a new Rule 400 clause stating that skipping Form TR creates no presumption that a token is tied to an investment contract, since filing could become a litmus test for a future commission. Another fix targets Rule 500(b), which overrides state law for secondary-market trades but excludes dealers with no end date, leaving registered dealers to seek state-by-state exemptions.
XRP’s Legal Fight Shows the Cost of Regulatory Uncertainty
Ripple’s argument drew heavily on its own legal dispute with the SEC. According to it, after the SEC sued in December 2020 alleging XRP was itself a security, the token fell roughly 70% within days and about $15 billion in market value disappeared, with nearly every exchange open to US customers delisting it or blocking access.
A July 2023 district court ruling that XRP is not in itself a security then added about $21 billion to its market cap, and Coinbase and Kraken restored US trading the same day, with Alderoty pointing to the financial burden of obtaining that legal clarity on X.
“Ripple spent more than $150 million to get clarity. No company should have to do that to learn what the law requires,” he wrote.
The letter also cited a National Cryptocurrency Association study that estimates that having clearer rules in place from 2022 to October 2026 would have brought 382 to 1,518 more US token offerings and $325 million to $1.117 billion in capital, mostly from projects that otherwise raised money abroad.
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