Ripple Challenges SEC's Crypto Security Classification in Key Filing

Ripple, the company behind XRP, recently argued in a letter to the US Securities and Exchange Commission (SEC) that fungible cryptocurrencies are not securities when transferred in secondary transactions. Supporting this claim, Ripple referenced Lewis Cohen, a prominent US attorney and crypto law expert, who stated in his 2022 paper that current securities law does not classify most fungible crypto assets as securities during secondary transfers. Cohen elaborated that such transactions typically lack an investment contract and do not establish a legal relationship between the holder and a entity, which is essential for securities classification. Additionally, Ripple highlighted SEC Commissioner Hester Peirce's speech advocating for a new, more rational regulatory approach, noting most cryptocurrencies are not securities but could be considered so if distributed as part of an investment contract. The ongoing legal saga with the SEC stems from a 2020 lawsuit in which the SEC claimed XRP sales were unregistered securities, but recent developments and court rulings have favored Ripple, including a ruling that XRP itself is not a security. This discourse underscores the evolving legal interpretations surrounding cryptocurrencies and their regulatory treatment.