Ripple asks SEC to finalize crypto rule after $150 million XRP fight

Key takeaways

  • Ripple filed a comment letter with the SEC supporting proposed Regulation Crypto Assets and asking the agency to finalize it.
  • Ripple argues the rule should treat the investment contract, not the token, as the security, and should avoid a subjective decentralization test.
  • The company seeks changes to Rule 400 and Rule 500(b), including no presumption against tokens when issuers skip Form TR and a narrower dealer exemption gap.
  • Ripple points to its own XRP litigation: December 2020 SEC action preceded a roughly 70% token fall and about $15 billion market value loss, while July 2023 ruling preceded about $21 billion added and US trading restoration on Coinbase and Kraken.
  • Ripple says it spent more than $150 million to obtain clarity, and cites a National Cryptocurrency Association estimate of 382 to 1,518 additional US token offerings and $325 million to $1.117 billion in capital if clearer rules had existed from 2022 to October 2026.

What happened
As first reported by CryptoPotato, Ripple has asked the SEC to finalize proposed Regulation Crypto Assets, framing the rule as a way to replace years of case-by-case uncertainty with a settled legal framework while preserving investor protection under existing regulations. The proposal's central premise is that a security is the investment contract, not the token itself. Ripple's chief legal officer, Stuart Alderoty, tied that approach to Howey, the 1946 Supreme Court case defining an investment contract, and said the test should turn on what an issuer promised and when those promises end rather than on a subjective decentralized label.

The comment letter also engages with the mechanics of the proposal. Rule 400, a proposed safe harbor, would allow an issuer to submit a public Form TR certifying that promised work is complete or abandoned. Ripple objects to a suggestion that the safe harbor be limited to issuers that fulfilled their promises. It argues buyers cannot expect profits from abandoned work either, so the filing should cover both completed and abandoned programs.

Ripple opposes dividing tokens into company-backed and network categories. The company warns that such a split could revive the implicit promise standard that the SEC dropped in its 2026 interpretation. In one example, Ripple says a company that directs 5% of each sale to buy and burn its own token creates an investment contract because the code automates a promise to return revenue to holders.

Market context
The filing rests on Ripple's own experience with regulatory uncertainty. According to Ripple, after the SEC sued in December 2020 alleging XRP was itself a security, the token fell roughly 70% within days, about $15 billion in market value disappeared, and nearly every exchange open to US customers delisted or blocked access. The July 2023 district court ruling that XRP is not in itself a security then added about $21 billion to its market cap. Coinbase and Kraken restored US trading the same day.

Alderoty used that sequence to argue that legal clarity carries a measurable cost. Writing on X, he said Ripple spent more than $150 million to get clarity, and no company should have to spend that much to learn what the law requires. The letter also cited a National Cryptocurrency Association study estimating that clearer rules in place from 2022 to October 2026 would have produced 382 to 1,518 more US token offerings and $325 million to $1.117 billion in capital, largely from projects that otherwise raised funds abroad.

Why it matters
For crypto projects, the debate is over how much legal risk remains attached to a token after issuance. If the proposal becomes law in its current form, issuers could rely on Rule 400 to show that promised work is finished or abandoned, reducing the chance that a token is treated as an ongoing security. Ripple's requested changes would make that safe harbor broader for abandoned projects and would prevent failure to file Form TR from being read as a sign that an investment contract still exists, because filing could become a litmus test for a future commission.

The authority question matters too. Ripple points to Section 28 of the Securities Act and Section 36 of the Exchange Act, which allow the SEC to exempt classes of securities. It says a failed 49-50 Senate vote on September 15 to advance the Digital Asset Market Clarity Act does not remove that authority. The letter also seeks a fix to Rule 500(b), which overrides state law for secondary-market trades but excludes dealers with no end date. Ripple argues that gap would force registered dealers to pursue state-by-state exemptions.

What to watch
The next question is whether the SEC finalizes Regulation Crypto Assets and how it resolves the issues raised in Ripple's letter. Readers should watch whether Rule 400 allows abandoned programs, whether skipping Form TR creates a presumption of a security, and whether the SEC keeps company-backed and network token categories separate. The treatment of dealers under Rule 500(b) and any further action on the Digital Asset Market Clarity Act could shape how much flexibility the SEC retains to exempt classes of securities.