SEC Anticipated to Classify XRP as Commodity in Ripple Lawsuit Settlement Talks
The legal dispute between Ripple Labs and the SEC may be nearing a critical turning point with reports indicating that the U.S. Securities and Exchange Commission is contemplating classifying XRP as a commodity in its ongoing settlement discussions with Ripple. This potential development could have significant implications not only for the XRP lawsuit but also for regulatory clarity and the broader cryptocurrency market.
The SEC is reportedly deliberating whether XRP should be categorized in a similar manner to Ethereum, which is presently recognized as a commodity by the SEC despite its initial coin offering (ICO) fundraising history. If the SEC determines that XRP, like Ethereum, has evolved beyond its original sale structure and now functions primarily as a cryptocurrency for Ripple, this could represent a substantial win for Ripple Labs and could reshape the regulatory environment for digital assets.
Ripple’s legal team is said to be advocating for more favorable terms in the settlement negotiations, arguing that the SEC has exhibited leniency toward other crypto companies. They highlight Judge Analisa Torres’ ruling in July 2023, where XRP was deemed “not inherently a security,” as evidence supporting their position. Ripple contends that agreeing to a settlement under the SEC’s current terms would imply an acknowledgement of wrongdoing, particularly since the regulator seems uncertain about its legal arguments.
Negotiations are reportedly underway to reduce the $125 million fine imposed on Ripple Labs and amend restrictions related to XRP sales to institutional investors. The possibility of a settlement has already had a positive impact on the XRP price, which has surged over 23% in the past week, reaching $2.34. This hopeful outlook has sparked investor optimism and led some to purchase XRP in anticipation of a bullish trend.
Market analysts believe that a favorable settlement could pave the way for an XRP Spot ETF, potentially increasing institutional interest in Ripple exchange-traded funds. Approval of an XRP ETF is contingent on regulatory clarity, and a commodity classification from the SEC could facilitate investments in Ripple ETFs by institutional players.
An interesting proposal submitted to the SEC suggests reclassifying XRP as a payment network rather than a security, potentially unlocking substantial liquidity in Nostro accounts, estimated at $1.5 trillion. This proposal could transform cross-border payments, positioning Ripple’s ledger as a fundamental component of financial infrastructure and even allowing for the purchase of Bitcoin using released capital, positioning Ripple USD as a significant element in the U.S. digital economy.
As negotiations continue, the crypto community eagerly awaits updates on the outcome of the SEC-Ripple discussions. A successful settlement would enhance the credibility of XRP, potentially leading to greater adoption of Ripple USD in mainstream banking solutions. The possibility of financial institution collaborations, such as Ripple Bank of America, could also increase XRP’s utility in cross-border transactions, further solidifying its position in the market.
Investors are closely monitoring developments in the legal battle, contemplating whether to buy or sell XRP ahead of a final verdict. The outcome of the Ripple lawsuit not only impacts the value of Ripple’s currency but also sets the tone for the regulatory environment of digital currencies in the United States.
