Ripple Urges SEC to Finalize Crypto Rules and Clarify Token Status
Ripple asks the SEC to finalize its proposed framework, requesting clearer guidelines on when digital tokens cease to be classified as securities.
Ripple Urges SEC to Finalize Crypto Rules and Clarify Token Status
Ripple asks the SEC to finalize its proposed framework, requesting clearer guidelines on when digital tokens cease to be classified as securities.
Pushing for Clarity Under Regulation Crypto Assets
Ripple Labs has formally urged the United States Securities and Exchange Commission to finalize its proposed Regulation Crypto Assets framework. According to Crypto Briefing, the company argued that digital assets should not remain indefinitely subject to securities laws simply because of their original investment arrangements.
In an October 20 letter, Ripple expressed support for the regulatory proposal while requesting essential clarifications. The firm asked for more details on how investment contracts conclude, how crypto assets are classified, and how intermediaries like exchanges can operate smoothly within the framework.
Defining the End of Investment Contracts
Ripple's core position is that an investment contract involving a cryptocurrency does not automatically render the underlying token a security forever. Instead, securities obligations should rely heavily on the issuer's ongoing promises to investors and whether those obligations remain active.
The company suggested that investment contracts can effectively end once an issuer fulfills or permanently ceases the managerial activities originally promised. Furthermore, Ripple cautioned regulators against relying solely on decentralization as a determining factor for security status, noting that software development and token ownership do not dictate the continuation of an investment contract.
Secondary Markets and Compliance Concerns
Beyond initial token classifications, Ripple raised several concerns regarding provisions that could complicate secondary market trading. The firm warned that the proposed rules might subject registered dealers to extra state securities requirements even when they are simply providing ordinary market liquidity.
Stuart Alderoty, Ripple Chief Legal Officer, noted that the company has spent more than $150 million seeking regulatory clarity. He argued that historical enforcement focused on individual tokens has largely pushed innovation outside the United States.
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