Ripple Provides Guidance To US SEC On Crypto Regulation, Here’s All

Ripple has submitted a formal response to the U.S. Securities and Exchange Commission (SEC) following Commissioner Hester Peirce’s February 21 request for public input on digital asset classification. The request, titled “There must be some way out of here,” sought constructive feedback to develop clearer standards for cryptocurrency regulation. Ripple’s response calls for the SEC’s Crypto Task Force to base its actions on existing law, avoid overly complex interpretations, and promote regulatory clarity.

Ripple Responds to US SEC: Calls for Clear Crypto Rules

Responding to US SEC Commissioner Hester Peirce’s February 21 request, Ripple outlined its recommendations for crypto regulation. The company focused on the need for clarity and consistency in applying U.S. securities laws to digital assets.

The XRP company stated that the US SEC does not have authority over most digital assets under current statutes. It emphasized that the SEC can only regulate securities as defined in the Securities Act of 1933 and the Exchange Act of 1934. According to Ripple, any attempt to expand that authority without Congressional action would exceed the agency’s legal bounds.

More so, the crypto company also challenged the previous administration’s approach to applying the Howey test. The company noted that speculative trading and token value discussions were incorrectly used to define investment contracts. Ripple urged the US SEC to avoid misusing legal tests to claim jurisdiction over transactions that do not involve securities.

This move comes just days after the US SEC officially dropped its long-standing lawsuit against Ripple, marking a major turning point for the crypto industry. The announcement, made by CEO Brad Garlinghouse, triggered a sharp surge in XRP price and renewed investor optimism.

Law-Based Definitions for Crypto Assets

In the filing, Ripple called for the use of traditional legal terms, such as “investment contract,” when classifying digital assets. The company argued that a valid investment contract requires a clear, enforceable agreement between parties. This includes an expectation of profit generated through the actions of a counterparty.

Ripple warned against expanding the definition of securities to include digital assets without a contractual promise. It stated that simply selling a token should not be treated as a capital raise or investment contract. The company asked the regulator to focus on straightforward applications of existing legal standards.

According to Ripple, using broad concepts such as “decentralization” or “common interest” risks distorting regulation. The company encouraged the SEC to set crypto regulations that promote predictability and prevent overreach.

Staking from Securities Laws

Additionally, the XRP company addressed staking mechanisms on decentralized networks in its letter. It argued that these systems do not meet the definition of a securities offering. The crypto company emphasized that staking rewards are often generated by protocols through algorithmic rules, not through the managerial efforts of a third party.

The company asked the US SEC to confirm that such yield-generating activities do not require securities registration. Ripple stated that these arrangements lack an identifiable issuer or counterparty making investment promises. As a result, they should fall outside the U.S. Securities and Exchange Commission regulatory scope.

The XRP company concluded that clear, limited, and legally grounded guidance would support market participants.

Meanwhile, the end of the XRP vs SEC lawsuit has sparked renewed bullish momentum, with analysts predicting the altcoin to rally to new highs. Egrag Crypto forecasts a surge to between $5 and $6, with the potential for a spike up to $10.