In a significant legal victory for Ripple, the value of its XRP token experienced a remarkable surge following a judge’s ruling in the Southern District of New York, which declared that XRP is “not necessarily a security on its face.” The Coin Metrics data revealed that XRP witnessed a staggering 71% surge, reaching approximately 80 cents per coin. This verdict not only bolstered confidence among crypto investors but also ignited hope that other alternative coins, or altcoins, may not face classification as securities. As a result, several prominent altcoins, such as Polygon’s matic token, Litecoin, Solana, and Cardano’s token, experienced substantial gains of 17.82%, 18.35%, 18.35%, and 20.31% respectively. Furthermore, the dominant cryptocurrencies Bitcoin and Ether also received a significant boost, with their prices rising by over 4% and 6% respectively.
Industry experts are hailing the court ruling as a momentous step forward for the entire crypto sector. Chris Martin, the Head of Research at Amberdata, stated in an interview with CNBC, “The judgments today are a huge step forward for the industry. By judging that XRP is not a security, we’re starting to get clarity on what constitutes a security and what constitutes a commodity.” Martin further emphasized that the Securities and Exchange Commission (SEC) will need to reassess their strategies in the ongoing cases, as this ruling is expected to impact the classification of several other tokens as non-securities.
Coinbase, a leading cryptocurrency exchange, which previously delisted XRP from its trading platform due to the SEC lawsuit, announced via Twitter that it would once again allow trading of the asset. Similarly, Gemini, another prominent exchange, stated that it is currently “exploring the listing of XRP for both spot and derivatives trading,” reports CNBC.
“The judgment that institutional sales of XRP by Ripple constitute securities also has massive implications for the industry with several ICO’s now likely in the spotlight,” added Martin. However, he noted that the impact of this ruling on exchanges involved in ongoing SEC cases remains uncertain, as these exchanges have primarily been engaged in secondary sales. Nevertheless, the bullish response from the market underscores the optimism surrounding these court decisions, as reported in Reuters.
This recent ruling marks a pivotal moment in the protracted legal battle between Ripple and the SEC, which has endured for three years. It is crucial to note that there is a possibility that certain aspects of the judgment could be appealed and potentially overturned. The filing indicates that the court will issue a separate order to set a trial date.
The SEC initially sued Ripple in 2020, accusing the company of violating U.S. securities laws by selling XRP without registering it with the agency. Thus, the judge’s ruling in favor of Ripple represents a significant milestone and a crucial hurdle cleared for the crypto industry, especially in the face of the challenging macroeconomic environment that continues to impact crypto assets. Over the past several weeks, digital currencies have faced intense regulatory scrutiny in the United States, exemplified by the SEC’s lawsuits against Coinbase and Binance in June.
Following the ruling, Coinbase’s shares surged by more than 24% as investors expressed optimism about the company’s prospects in its own legal battle with the SEC. Likewise, Robinhood and Block, two platforms offering cryptocurrency trading services, experienced notable gains of 4.3% and 7% respectively. Microstrategy, a company serving as a Bitcoin proxy, also witnessed a remarkable surge of nearly 12%. Furthermore, mining companies observed double-digit percentage increases in their stock prices.
Although investors have responded positively to Thursday’s ruling, it is crucial to note that the judgment is not without its complexities. Stephen Palley, a partner at Brown Rudnick, cautioned against perceiving the ruling as an outright victory for Ripple, stating that the notion that XRP is unequivocally not a security is incorrect. However, Palley acknowledged, “if I were an XRP holder, I’d be happy right now.”
The ruling analyzed three different sets of circumstances related to the sale of XRP: institutional sales, programmatic sales, and other distributions, such as employee compensation. The court supported the SEC’s argument regarding “Ripple’s Institutional Sales of XRP to sophisticated individuals and entities,” concluding that these constituted securities transactions involving an investment of money. However, according to Report Dome, Ripple prevailed when it came to “programmatic” sales made through trading algorithms and other distributions.
Palley underscored another crucial aspect of the ruling, highlighting the question of whether crypto exchanges like Coinbase need to register as securities exchanges themselves. While the SEC has asserted that most traded crypto assets should be treated as securities, the court did not reach a definitive conclusion on this matter, according to Forbes, which can be considered another win for Ripple, according to Palley.
The implications of this landmark ruling are likely to reverberate throughout the crypto industry, leading to potential shifts in regulatory strategies and the classification of various digital tokens. As the legal battle continues, market participants eagerly anticipate the next chapter in this evolving landscape, which could shape the future of cryptocurrencies and their regulatory frameworks.