Ripple’s Legal Chief Demands SEC Clarity in New Letter 

The letter builds on Commissioner Hester Peirce’s “New Paradigm” speech and focuses on a critical regulatory issue: when and how a crypto asset becomes separate from the investment contract it may have once been part of.

In the letter, Alderoty reiterated Ripple’s stance, supported by legal scholarship and Judge Torres’s 2023 ruling, that XRP is not inherently a security. He cited The Ineluctable Modality of Securities Law by Lewis Cohen and others, arguing that once a token is no longer tied to enforceable promises or rights, it should not be treated as a security.

The letter pushes back on the SEC’s broad enforcement model and emphasizes the need for clear legal boundaries, rather than vague standards like “fully functional” or “sufficiently decentralized.” Ripple proposed a two-part framework to determine whether a token is still linked to an investment contract:

Whether the issuer has any outstanding, unfulfilled material promises made during the initial offering.
Whether the current holder has enforceable rights arising from those promises.

READ MORE:

Crypto Market Cools as Bitcoin Retreats from Post-Tariff Highs

If both are not present, the asset should be presumed to have severed from its investment contract.

Alderoty stressed that creating a safe harbor for good-faith crypto innovators could reduce regulatory uncertainty and support compliant development. However, he warned that such frameworks must respect current securities law and not extend it unnecessarily.

Ripple’s letter concludes with a call for Congress—not the SEC—to define new rules where gaps exist. Until then, the SEC should focus on enforcing existing law without overreach, providing clarity without crushing innovation.

The post Ripple’s Legal Chief Demands SEC Clarity in New Letter  appeared first on Coindoo.