SEC waives Rule 506 disqualification, allowing Ripple to sell securities to accredited investors.

SEC waives Rule 506 disqualification, allowing Ripple to sell securities to accredited investors.

The U.S. Securities and Exchange Commission (SEC) has granted Ripple Labs a waiver from a Regulation D disqualification, allowing the company to sell securities to accredited investors. This move comes after a long-standing legal battle between Ripple and the SEC, which began in 2020. The waiver is a significant development for Ripple, as it restores the company’s ability to raise capital through Regulation D, a set of rules providing exemptions from the normal registration requirements for certain private offerings [1].

The SEC’s decision to waive the disqualification follows a series of legal maneuvers. In August 2024, the U.S. District Court for the Southern District of New York issued a final judgment permanently enjoining Ripple from further violations of securities laws. Both parties subsequently filed appeals and sought to dissolve the injunction, but the district court rejected this request. As a result, the SEC issued the waiver, concluding that there was good cause to grant an exemption under Rule 506(d)(2)(ii) of the Securities Act [1].

This waiver has immediate implications for Ripple and the broader cryptocurrency market. It allows Ripple to raise funds from accredited investors without undergoing full SEC registration, a process that can be time-consuming and costly. The decision has drawn positive reactions from cryptocurrency advocates, who see it as a step toward greater institutional adoption of XRP and other cryptocurrencies [2].

The waiver also supports Ripple’s broader strategic goals, including its application for a national bank charter and the development of the RLUSD stablecoin. By regaining Regulation D privileges, Ripple can now raise unlimited funds from accredited investors, potentially fueling expansion and product innovation. This development is particularly significant in an industry where regulatory roadblocks can stall innovation [2].

While the waiver is a notable victory for Ripple, its full impact remains to be seen. The potential for an XRP exchange-traded fund (ETF) is still uncertain, pending further regulatory clarity. However, the waiver is a clear indication that the SEC is willing to provide regulatory relief in certain cases, which could pave the way for more cryptocurrency companies to navigate the complex landscape of securities law.

References:
[1] https://api.news.bitcoin.com/wp-json/bcn/v1/post?slug=another-win-for-xrp-as-ripple-secures-new-sec-waiver-accelerating-institutional-adoption
[2] https://coinpedia.org/news/ripple-scores-major-win-as-sec-lifts-bad-actor-ban/