Ripple Labs has urged the US Securities and Exchange Commission (SEC) to finalize its proposed Regulation Crypto Assets framework, arguing that digital assets should not remain subject to securities laws indefinitely because of their original investment arrangements.
In an October 20 letter, the company expressed support for the proposal while requesting additional clarity on how investment contracts end, how crypto assets are classified, and how exchanges and other intermediaries can operate under the framework.
Ripple argued that an investment contract involving a cryptocurrency does not automatically make the underlying token a security. Instead, the company’s position is that securities obligations should depend on the issuer’s promises to investors and whether those obligations remain in effect.
The filing also supports replacing regulatory uncertainty and enforcement actions against individual companies with rules that apply consistently across the crypto industry.
Ripple seeks clearer rules for token classifications
Ripple said the SEC’s framework should recognize that investment contracts can end once an issuer fulfills or permanently ceases the essential managerial activities promised to investors.
The company also urged regulators not to rely on decentralization as a determining factor in whether a token remains subject to securities laws. It argued that measures such as network governance, software development, and token ownership do not necessarily establish whether an investment contract continues to exist.
Under the SEC’s proposed Regulation Crypto Assets, crypto projects would have access to exemptions allowing offerings of up to $5 million over four years or $75 million during a 12 month period, subject to disclosure requirements and other conditions.
The proposal also introduces a mechanism allowing issuers to certify that their tokens are no longer subject to an investment contract through a Form TR filing.
Ripple supports that mechanism but wants the SEC to clarify that failing to submit Form TR does not automatically mean a token remains subject to securities laws.
The company also requested that exchanges, brokers, and dealers be allowed to rely on these filings when making listing and trading decisions, rather than continuously monitoring an issuer’s activities.
Ripple calls for protections in secondary markets
Beyond token classifications, Ripple raised concerns about provisions that could complicate secondary market trading.
The company argued that the proposed rules could leave registered dealers subject to additional state securities requirements even when they are providing ordinary market liquidity.
Ripple recommended narrowing those restrictions to protect dealers that are not participating in an issuer’s token distribution.
It also requested clarification that ordinary activities involving crypto assets, including holding, lending, pledging, collateralizing, and staking, should not independently trigger securities registration requirements.
The filing follows years of legal disputes between Ripple and the SEC over XRP sales. Ripple Chief Legal Officer Stuart Alderoty said the company spent more than $150 million seeking regulatory clarity, arguing that enforcement focused on individual companies and tokens had pushed innovation outside the US.
The SEC introduced Regulation Crypto Assets in August, with the public comment period closing on October 20. The agency must now evaluate industry feedback before deciding whether to adopt or revise the proposed rules.
Disclosure: This article was edited by John Chen. For more information on how we create and review content, see our Editorial Policy.