The U.S. Securities and Exchange Commission (SEC) is reportedly considering classifying XRP as a commodity in its settlement discussions with Ripple Labs, according to FOX Business senior correspondent Charles Gasparino. This potential reclassification could mark a major turning point in the long-standing SEC vs. Ripple lawsuit and have broad implications for future XRP ETFs and regulatory clarity.
Key Developments in the SEC vs. Ripple Case
- The SEC is evaluating XRP’s classification, using Ethereum (ETH) as a benchmark.
- Ethereum is currently considered a “pure commodity” despite its initial fundraising through an ICO.
- XRP did not have an ICO, and Ripple executives argue that XRP’s pre-mined distribution model differs from securities offerings.
XRP’s Legal Status So Far: A Recap
- In July 2023, Judge Analisa Torres ruled that XRP is not inherently a security when traded on secondary markets.
- However, the court found that Ripple’s direct sales of XRP to institutional investors constituted unregistered securities offerings.
- The Howey Test remains the standard for determining whether an asset qualifies as a security.
Settlement Talks Nearing Conclusion
- FOX Business journalist Eleanor Terrett reported that the legal battle is close to resolution, with Ripple negotiating terms on its $125 million fine and institutional sales restrictions.
- Discussions reflect the SEC’s shifting policies under its new leadership, signaling a potentially more favorable outcome for Ripple.
Why This Matters for XRP ETF Approvals
- Regulatory clarity is crucial for ETF approvals—XRP’s unresolved legal status has been a major barrier to launching spot XRP ETFs.
- Bloomberg ETF analyst James Seyffart recently noted that uncertain asset classifications (like Solana) complicate ETF approvals.
- If the SEC reclassifies XRP as a commodity, it would remove a major hurdle for XRP ETFs, increasing the likelihood of future regulatory approval.
What’s Next for XRP and the SEC?
- If the SEC formally recognizes XRP as a commodity, Ripple could gain regulatory clarity and avoid further securities-related restrictions.
- The resolution of this case may accelerate XRP adoption, making it more attractive for institutional investment and ETF issuers.
- Investors will closely monitor how this decision impacts the broader crypto regulatory landscape in the U.S.
With the SEC’s stance on crypto shifting, XRP’s regulatory future could soon be decided—paving the way for a new era of institutional adoption.
Hidden Insight
If XRP is reclassified as a commodity, it could set a precedent for other altcoins, leading to broader regulatory clarity for crypto ETFs. This shift could accelerate institutional adoption, driving XRP’s integration into mainstream finance—a major win for Ripple and its long-term strategy.