Ripple's official letter to the SEC delves into the question of defining the status of crypto assets and calls for clarity in legislation.
Ripple's Position on Asset Status
Ripple asserts that most fungible crypto assets are not securities when traded on the secondary market. This claim is supported by Judge Torres's ruling in the SEC v. Ripple case, which confirmed that XRP itself is not a security, although some institutional sales were classified as such.
Call to Legislators
The company urges lawmakers to address the remaining legal gaps, criticizing the SEC for relying on vague standards. Ripple emphasizes that a digital asset should be considered separate from an investment contract unless material promises made during the original investment contract remain unfulfilled.
Proposed 'Maturity' Criteria for Assets
Ripple has proposed a 'maturity' test as a clearer standard to determine when an asset is no longer part of an investment contract. Factors such as market value threshold and the duration of the network being open and permissionless are suggested, with no party having unilateral control over the network's core functionality.
Ripple's position may represent an important step in shaping the legal framework for crypto assets, contributing to much-needed clarity in regulation.
