Ripple,SEC Pause XRP Case for 60 Days Amid Settlement Talks

Ripple Labs and the U.S. Securities and Exchange Commission (SEC) have jointly requested a 60-day pause on their appeals in the ongoing legal dispute over XRP. This move, filed on April 10, is seen as a significant step towards a potential settlement in the long-running case. Both parties cited ongoing settlement discussions as the reason for the pause, aiming to conserve judicial and party resources while negotiations continue.

The request for abeyance comes after Ripple CEO Brad Garlinghouse's remarks in March, which suggested that the case was nearing its conclusion. The timing of the filing has sparked speculation that the SEC might be waiting for its incoming chair, Paul Atkins, to officially assume office before finalizing any settlement. Atkins was confirmed by the Senate on April 9, and his swearing-in is anticipated to occur soon, potentially as early as April 12.

Ripple's defense attorney, James Filan, confirmed that the abeyance request overrides the previous April 16 deadline for Ripple to respond to a brief filed by the SEC in January. Filan stated that the settlement is awaiting commission approval and that no brief will be filed on April 16. This development has been interpreted by some legal commentators as a signal that the SEC may be preparing to drop the case under new leadership, which could mark a significant shift in the agency's approach to crypto regulation.

The XRP case, which began in December 2020, has been one of the most closely watched legal battles in the crypto industry. The SEC's recent shift in tone under the current administration reflects a broader effort to reevaluate the agency's approach to digital assets. On April 5, SEC's Mark Uyeda announced that the agency is reviewing seven staff-issued statements, five of which concern cryptocurrencies, in line with the deregulation agenda and guidance from the Department of Government Efficiency.

Among the documents under review is a 2019 framework from the SEC’s FinHub that assessed when digital asset sales could qualify as investment contracts under the Howey test. Other statements being reconsidered include those from the Divisions of Investment Management, Corporation Finance, and Examinations, particularly those addressing risks tied to Bitcoin futures, crypto custody, and industry-wide bankruptcies during 2022. Additionally, the SEC announced new guidelines on April 4, stating that certain fiat-backed stablecoins will be classified as “non-securities,” thereby exempting them from transaction reporting requirements.

This pause in proceedings and the potential for a settlement have significant implications for the crypto industry. A resolution in the XRP case could set a precedent for how the SEC approaches other digital assets and could influence future regulatory frameworks. The outcome of this case will be closely watched by industry participants and regulators alike, as it has the potential to shape the future of crypto regulation in the United States.