Ripple has thrown its support behind the U.S. Securities and Exchange Commission's proposed Regulation Crypto Assets framework, calling on the agency to draw clearer lines around when cryptocurrencies fall under securities oversight. In a comment letter submitted on October 20, the company argued that investment contracts—not the underlying digital tokens themselves—should determine the scope of securities regulation.

Stuart Alderoty, Ripple's Chief Legal Officer, confirmed the submission and voiced support for the SEC's authority to introduce the framework. At the same time, Ripple pressed regulators to specify when investment contracts terminate and when the cryptocurrencies tied to them no longer face securities rules. The letter now forms part of the public record the SEC will weigh as it reviews comments on the proposal.

Tokens Should Not Inherit Contract-Based Status

The core of Ripple's argument is a separation between digital assets and the investment arrangements wrapped around their sale. According to the company, a token does not automatically become a security merely because investors first acquired it through an investment contract.

Ripple contends that regulatory obligations should instead hinge on the commitments issuers make to investors. Once an issuer fulfills those commitments or permanently discontinues them, the associated investment contract should no longer govern the token, in the company's view.

The firm also pushed back against treating decentralization as a standalone legal test for ending securities oversight. Ripple argues that regulators should evaluate concrete issuer promises rather than rely on subjective measurements of how decentralized a network has become.

What the SEC's Proposal Contains

The SEC introduced Regulation Crypto Assets in August 2026 to establish a tailored regulatory framework for cryptocurrency offerings. The proposal includes exemptions designed to help blockchain businesses raise capital while maintaining investor protections; the draft text is available on the SEC's website.

One exemption would allow eligible startups to raise as much as $5 million over four years. A separate pathway would permit qualifying cryptocurrency offerings of up to $75 million within 12 months, subject to additional disclosure requirements. The framework also proposes a conditional safe harbor addressing when digital assets cease to be associated with investment contracts—a provision that would set defined conditions for that transition, speaking directly to the termination question Ripple says regulators have left unspecified.

These provisions remain proposals for now and cannot take effect until the SEC adopts final rules.

Relief After a Costly Legal Battle

Ripple's endorsement follows its lengthy legal dispute with the SEC over XRP sales. Alderoty said the previous litigation cost the company more than $150 million, underscoring the financial burden of regulatory uncertainty.

Clearer rules, Ripple argues, could reduce reliance on enforcement actions and encourage cryptocurrency businesses to operate in the United States. The company is also seeking greater clarity around secondary-market transactions and regulatory filings.

For the broader cryptocurrency industry, the proposal could establish more predictable boundaries between securities transactions and ordinary token trading. From here, the key questions are whether the SEC's final text retains the conditional safe harbor and how far it goes in addressing the secondary-market and filing clarity Ripple has requested. Nevertheless, the final regulatory framework will depend on the SEC's review of public comments and its subsequent rulemaking decisions.

Source: CryptoMeter io