XRP News Today: Ripple CLO Urges Clear Digital Asset Regulation in Senate Response

Ripple’s Chief Legal Officer, Stuart Alderoty, has submitted a detailed response to the U.S. Senate Banking Committee regarding its Request for Information on proposed digital asset legislation. The response, shared publicly on X, underscores Ripple’s extensive global regulatory engagement and experience from its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC) [1]. Alderoty expressed appreciation for the opportunity to contribute to the legislative process, highlighting the importance of a clear and consistent regulatory framework [1].

Ripple has raised concerns about the current draft legislation, particularly around the SEC’s jurisdiction and the classification of digital assets. The company argues that the proposed framework risks overextending the SEC’s authority by tying the regulatory status of tokens like XRP, ETH, and SOL to historical investment contract status, regardless of their current use or maturity [1]. Ripple emphasizes that many of these tokens have been traded freely for years and should not be subject to indefinite SEC oversight simply based on past transactions [1].

A central issue in Ripple’s response is the overreliance on the Howey Test—a legal standard for determining whether an asset qualifies as a security. The company argues that the test has been stretched beyond its intended scope and calls for statutory clarity to prevent regulatory overreach. Ripple advocates for a legislative definition that limits SEC jurisdiction to actual investment contracts, rather than historical ones that no longer reflect current market practices [1].

To address regulatory uncertainty, Ripple proposes a “grandfathering” mechanism that would exempt tokens traded on open networks for at least five years from securities regulation. This would provide legal certainty for market participants and avoid retroactive enforcement actions that could destabilize mature markets. XRP, having been traded for over a decade, is likely to benefit from such a provision [1].

Ripple also calls for a clear distinction between core technological functions—such as staking and consensus mechanisms—and activities that may trigger securities regulations. The company argues that protocol-level operations should not be considered managerial efforts and should not be subjected to the same regulatory burdens as investment contracts. This, it claims, would protect developers and network participants from unnecessary oversight and potential regulatory abuse [1].

In addition, Ripple supports federal legislation to harmonize the fragmented landscape of state-level token regulations. A unified federal framework, the company argues, would reduce regulatory complexity, foster innovation, and preserve states’ ability to enforce fraud and consumer protection laws. Clear and stable legal boundaries are essential for tokens like XRP to operate within a predictable regulatory environment [1].

The response has been met with enthusiasm from the XRP community, who see it as a significant step toward resolving ongoing regulatory uncertainties. Many view Ripple’s engagement with Congress as a proactive effort to shape a regulatory environment that better reflects the unique characteristics of digital assets [1].

Source: [1] XRP Army Rejoices As Ripple CLO Responds to U.S. Senate Banking Committee (https://timestabloid.com/xrp-army-rejoices-as-ripple-clo-responds-to-u-s-senate-banking-committee/)