XRP News Today: Ripple Proposes Framework to Clarify Digital Asset Security Status

Ripple Labs has submitted a detailed legal framework to the U.S. Securities and Exchange Commission (SEC) to clarify when a digital asset should no longer be classified as a security. This initiative is part of Ripple's broader efforts to influence crypto regulation and defend the status of its native token, XRP. The four-page memorandum, sent to the SEC’s Crypto Task Force, directly addresses concerns raised by Commissioner Hester Peirce regarding the separation of a digital asset from an investment contract.

Ripple's proposal outlines a two-pronged framework for determining when a token has "severed" from its associated investment contract. According to Ripple, a secondary sale of a token should not be treated as a securities transaction unless two conditions are met: a material promise to the original buyer remains unfulfilled, and the current holder possesses enforceable rights linked to that promise. Ripple emphasizes that vague statements or promotional "puffery" should not constitute such enforceable promises. This approach aligns with Judge Analisa Torres’ July 2023 ruling in the XRP lawsuit, which held that XRP is not inherently a security, even though some early institutional sales were deemed investment contracts.

Ripple's legal stance also calls for congressional action and regulatory safe harbor. The company argues that ambiguous standards like "fully functional" or "sufficiently decentralized," often cited by the SEC, lack clarity and pose risks to innovation. Instead, Ripple advocates for a time-bound safe harbor rule, protecting blockchain projects in their early stages of development. Ripple believes that using network maturity as a criterion, rather than decentralization metrics, offers a more practical regulatory benchmark. The company stated, "If there are regulatory gaps, it’s Congress’s—not the SEC’s—responsibility to close them," pushing back on the agency’s expansive interpretations.

Ripple's arguments are bolstered by its partial court victory in 2023, where the judge ruled that XRP itself is not a security. The SEC’s subsequent appeal was withdrawn, marking a major shift in the Ripple lawsuit timeline. While a proposed settlement to resolve Ripple’s institutional sales liability has been submitted, court approval remains pending. This move is seen as part of Ripple’s broader strategy to cement XRP’s regulatory clarity ahead of the SEC’s upcoming digital asset conference. The fresh communication from Ripple comes at a time when industry players are urging the agency to adopt more practical rules for the growing crypto sector.

Ripple's proposal has sparked conversation across the crypto community, reaffirming the company’s commitment to challenging what it views as outdated and overreaching securities regulation. Commissioner Peirce herself admitted that the current regulatory model is flawed, stating, "Most currently existing crypto assets in the market are not securities." Ripple seized on this sentiment, positioning XRP as a case study for legal separation from investment contracts under its proposed test. With renewed calls for a legislative solution and judicial precedent in its favor, Ripple appears determined to lead the charge for crypto clarity in the U.S.

Ask Aime: What does Ripple's legal framework submission to the SEC mean for XRP's classification?