In a groundbreaking event, a U.S. judge made a ruling that XRP tokens purchased via exchanges were not classified as securities transactions. This ruling is a significant win for Ripple; this company is behind the XRP tokens. The SEC (Securities and Exchange Commission) filed a lawsuit against Ripple in 2020, accusing the company of violating securities laws. However, this ruling has brought much-needed clarity and relief to cryptocurrency exchanges and regular investors.
Among those celebrating the ruling is Coinbase, a prominent cryptocurrency exchange. Coinbase, which is currently facing its own lawsuit from the SEC, has expressed renewed confidence in its case following the XRP court opinion. Paul Grewal, Coinbase’s Chief Legal Officer, emphasized that the ruling dealt a blow to a notion that security is traded on exchanges. He confidently stated that Coinbase expects to prevail in its legal battle with the SEC, asserting that this recent decision further strengthens its position.
Coinbase’s optimism from the court ruling XRP was not deemed a security. This designation opens the door to the possibility of numerous other cryptocurrencies escaping the purview of securities regulations. Grewal clarified that this doesn’t mean securities laws are universally inapplicable, but the logic behind the decision extends beyond XRP to other tokens.
A component of the judgment deemed the sale of XRP to involve institutional clients or investors as a security in the transaction. The aspect directly relates to how XRP was sold to institutional clients by Ripple, but it does not undermine the broader ruling. Grewal downplayed its significance, highlighting that the court clarified that tokens are not considered securities when traded on exchanges at arm’s length.
The ruling brings a legal victory for Ripple Labs Inc. and the cryptocurrency industry as a whole. Following the announcement, the value of XRP surged by 75%. This ruling sets a precedent and could strengthen the position of other cryptocurrency companies facing legal battles with the SEC.
While the SEC expressed satisfaction with the partial victory regarding Ripple’s violation of federal securities law when selling XRP to sophisticated investors, Brad Garlinghouse, the Ripple CEO, saw the ruling as a monumental triumph for Ripple and the entire cryptocurrency industry.
In response to the ruling, Coinbase announced that it would resume trading of XRP on its platform. The company’s Chief Legal Officer, Paul Grewal, confirmed the decision after reviewing the court’s ruling and expressing confidence in their analysis.
Overall, the Ripple SEC ruling has brought renewed optimism to the cryptocurrency industries, which has the potential to shape future regulatory frameworks. Exchanges like Coinbase are hopeful that this ruling will provide greater clarity and pave the way for a more favorable regulatory environment for cryptocurrencies.
