Crypto Legal Victory Sparks Hope

Martin Walker
Sep 10, 2023 at 10:26 am

A recent court ruling in favor of Ripple's XRP token, asserting that it does not qualify as a security offering, could signify a turning point in the regulatory landscape for cryptocurrencies within the United States. This development carries potential implications for ongoing legal battles involving major players like Coinbase and Binance.US, as well as pending exchange-traded fund (ETF) applications.

At the annual Apex developer conference hosted in Amsterdam, Ripple's Chief Technology Officer, David Schwartz, shared his insights on the possible precedent set by a federal judge's decision regarding XRP. The judge ruled that when XRP is programmatically sold on cryptocurrency exchanges, it should not be classified as a security.

Ripple has been embroiled in a protracted legal dispute with the U.S. Securities and Exchange Commission (SEC) since 2020. However, its recent partial victory could have positive ramifications for several crypto-related lawsuits initiated by the SEC.

Schwartz acknowledged that the SEC case had a negative impact on Ripple's business deals that were in progress. Nevertheless, he emphasized that the greater loss was felt within the cryptocurrency community, as the delisting of XRP from prominent exchanges stifled ecosystem support. This situation has evolved following the recent ruling in favor of XRP:

"The ruling we've received thus far has enabled exchanges to relist XRP, which is a significant development for the entire crypto ecosystem."

Schwartz also pointed out a shift in sentiment within the U.S. crypto ecosystem. Participants are contemplating the possibility of relocating to different jurisdictions to continue their operations in a more regulatory-friendly environment:

"It's regrettable that I have to advise people that the United States might not be their ideal location, but the tide is changing. The ruling in our lawsuit, which essentially asserts that XRP is not inherently a security, carries immense significance."

Schwartz observed that the broader industry is now facing the same scrutiny that Ripple initially encountered from the SEC in 2020. Prominent cryptocurrency blockchains such as Solana, Cardano, and Polygon have seen their respective tokens categorized as unregistered securities in the SEC's lawsuits against Coinbase earlier in 2023:

"The SEC can apply these same arguments to any cryptocurrency or business. Fortunately, people have a better understanding of this argument now, having witnessed the SEC's actions against Coinbase and others."

Furthermore, Ripple's Chief Technology Officer believes that U.S. judges are becoming more skeptical about cases brought forward by the SEC. Companies with substantial resources are now taking a stand that could ultimately benefit the entire industry:

"They are encountering significant resistance from Coinbase and challenges related to ETFs. Hopefully, this will prompt positive changes at the legislative level."

Ripple's Apex conference serves as a gathering for developers working within the XRP Ledger blockchain ecosystem, which underpins RippleNet, the platform managing Ripple's XRP payments system.

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