Ripple backs SEC crypto rule after $150M legal fight, seeks key changes

The SEC's 2020 lawsuit against Ripple accused the company of selling XRP as an unregistered security, a case that produced mixed rulings and ended with Ripple's own tally of $150 million in legal costs. That fight became the industry's reference point for 'regulation by enforcement,' the approach the SEC pursued before this proposal emerged. Regulation Crypto Assets, now out for public comment, is the agency's first attempt at writing explicit rules instead of litigating each token case individually.

Issuers would gain a route to argue a token stops being a security once the underlying investment contract matures, tied to Ripple's proposed Rule 400 standard covering managerial work that is 'completed or abandoned.' Exchanges and broker-dealers listing XRP and similar assets could operate without threat of fresh enforcement actions, while investors retain protections under existing securities rules. Lawyers advising token issuers will need to rewrite risk disclosures around this investment-contract test rather than the token itself.

Ripple's push sits on an uncomfortable fact: a company that spent years and $150 million resisting the SEC's enforcement powers is now asking to help write the rules that replace them. That is less hypocrisy than the natural outcome of litigation, but it raises a fair question about whose interests a negotiated framework ultimately serves. Clearer rules benefit issuers seeking certainty; critics will ask whether investor protections survive the shift from courtroom scrutiny to statute.

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