- The US SEC is considering declaring XRP as a commodity in the ongoing settlement talks with Ripple Labs.
- FOX News reports suggest Ethereum’s regulatory status remains a key reference for XRP’s litigation verdict.
- In July 2023, US District Judge Analisa Torres declared XRP is not inherently a security.
In a significant development that has sent ripples through the cryptocurrency market, the US Securities and Exchange Commission (SEC) is reportedly considering classifying XRP as a commodity during ongoing settlement negotiations with Ripple Labs. This potential shift in stance, highlighted in recent reports from FOX News, has ignited bullish sentiment around XRP, pushing its price past the $2.34 mark with a 23% gain over the past week.
The SEC’s deliberation is reportedly using Ethereum’s regulatory status as a key reference point. Despite its initial fundraising through an Initial Coin Offering (ICO), similar to XRP, Ethereum is now considered by the SEC to trade as a “pure commodity.” This precedent is crucial, as both cryptocurrencies were initially sold to fund project development.
This development comes on the heels of a landmark ruling in July 2023, where US District Judge Analisa Torres declared that XRP is not inherently a security, especially when traded on secondary markets. The ruling clarified that XRP sales on exchanges did not constitute securities offerings as buyers lacked a direct relationship with Ripple and were unaware of the company’s involvement.
FOX journalist Eleanor Terrett reported on Wednesday that the long-standing legal battle between the SEC and Ripple is nearing a conclusion, with both parties actively working towards a resolution. A key point of contention in the settlement talks revolves around the SEC’s potential reconsideration of its stance on XRP.
According to Terrett, the argument being made is that if the SEC’s new leadership is “wiping the enforcement slate clean” for previously targeted crypto firms due to a belief that regulatory clarity will resolve underlying issues, then why should Ripple still be penalized? Accepting the Torres ruling as it stands would imply Ripple admitting wrongdoing, something the SEC itself now appears uncertain about.
Ripple’s legal team is reportedly in negotiations to adjust the terms of the previous ruling, which included a $125 million fine and restrictions on selling XRP to institutional investors. Discussions are focusing on adapting these terms to reflect the evolving SEC policies under its new leadership.
XRP Price Surges and ETF Prospects Brighten
The market has reacted positively to this news, with XRP experiencing a notable price surge. This bullish momentum suggests that despite the broader crypto market facing negative sentiment, positive developments surrounding XRP are providing a significant buffer against short-term dips.
Furthermore, a potential reclassification of XRP as a commodity by the SEC would have significant implications for the approval of a spot XRP Exchange Traded Fund (ETF). Bloomberg ETF analyst James Seyffart previously highlighted the challenges facing Solana ETFs due to the SEC’s security classification of Solana and ongoing lawsuits. He noted that the SEC typically seeks clarity and resolution of legal disputes before approving financial products related to assets with uncertain regulatory status.
While Seyffart’s comments weren’t specific to XRP, the parallels are clear. The SEC’s lawsuit against Ripple has been a major obstacle for any XRP ETF filings. If the SEC’s stance on XRP shifts, potentially leading to its reclassification as a commodity, it would not only impact Ripple’s legal battle but also substantially increase the likelihood of spot XRP ETF approvals.
Conclusion
The potential reclassification of XRP as a commodity by the SEC during settlement talks with Ripple Labs marks a significant turning point in the ongoing legal saga. This development, fueled by the reference to Ethereum’s regulatory treatment, has already triggered a positive market response and holds the promise of paving the way for a spot XRP ETF in the future. As the legal battle nears its conclusion, the crypto world will be watching closely to see if this potential shift in the SEC’s stance will usher in a new era of regulatory clarity for XRP.
