Ripple has urged the U.S. Securities and Exchange Commission (SEC) to finalize its proposed Regulation Crypto Assets, citing years of uncertainty over digital asset rules. In a comment letter filed with the agency, Ripple Chief Legal Officer Stuart Alderoty backed a framework grounded in existing securities laws, while pressing for changes to several provisions affecting token issuers and secondary-market trading.

Ripple Challenges SEC Rules on Investment Contracts

At the center of Ripple's letter is the argument that an investment contract—rather than the token itself—constitutes a security under the Supreme Court's 1946 Howey test. Alderoty said the SEC's proposal follows that principle by focusing on issuers' actual promises and on when those obligations come to an end.

Under proposed Rule 400, issuers could file Form TR to certify that promised work has been completed or abandoned. Ripple opposes restricting this option to projects that have been finished, arguing that abandoned work likewise ends buyers' expectations of profits and should qualify for the same certification.

The company also rejects dividing tokens into "company-backed" and "network" categories, warning that the approach could revive the SEC's earlier reliance on implicit promises. Ripple further cited an example in which automatically using 5% of token sales to repurchase and burn tokens could itself create an investment contract.

Ripple Seeks Changes to Proposed Crypto Regulations

Ripple pointed to Section 28 of the Securities Act and Section 36 of the Exchange Act as authority for exemptions covering classes of securities. According to the letter, the September 15 Senate vote that failed to advance the Digital Asset Market Clarity Act does not remove that authority.

The company also wants Rule 400 to clarify that choosing not to file Form TR does not establish a presumption that a token involves an investment contract. It additionally seeks changes to Rule 500(b), which overrides state law for secondary-market trades but leaves registered dealers without a defined end date for their exemptions.

XRP Lawsuit Highlights Financial Cost of Uncertainty

Ripple's letter drew on its legal dispute with the SEC, which sued the company in December 2020 over XRP sales. XRP fell roughly 70% within days, wiping out about $15 billion in market value as exchanges restricted or removed U.S. trading. A July 2023 court ruling that XRP was not inherently a security added roughly $21 billion to the token's market capitalization, and Coinbase and Kraken restored U.S. trading that day.

Alderoty said Ripple spent more than $150 million obtaining legal clarity. The letter also cited a National Cryptocurrency Association study estimating that clearer rules could have supported 382 to 1,518 additional U.S. token offerings from 2022 through October 2026, attracting between $325 million and $1.117 billion in capital.