Ripple Backs SEC Crypto Rule in 20-Page Filing After XRP Fight

A 20-Page Letter to the SEC

Ripple filed a 20-page comment letter with the U.S. Securities and Exchange Commission on October 20, formally backing the regulator's proposed Regulation Crypto Assets and asking it to end years of case-by-case enforcement. The company behind XRP argues that policymaking through lawsuits has pushed crypto development offshore, and it wants the SEC to carry through the framework it first put on the table in August. The letter puts numbers on that argument, citing research showing the U.S. share of global crypto developers fell from 38% in 2015 to 19% in 2024, even as Ripple's own U.S. hiring doubled in 2024. The public comment deadline fell on the same day the letter arrived, so the submission lands exactly as the regulator starts weighing industry responses. The draft rule would create two registration exemptions for qualifying investment contracts involving digital assets. One pathway would let eligible projects raise up to $5 million over a four-year period. A separate exemption would permit offerings of up to $75 million within 12 months, subject to added disclosure and financial reporting duties. Neither exemption is in force yet. The proposal also carries a conditional safe harbor for digital assets that have ceased to be investment contracts, a provision Ripple endorses because it would give the market a defined process for deciding when an issuer's original promises have ended. Chief Legal Officer Stuart Alderoty confirmed the filing in a post on X, writing, “We are for this proposal. The SEC clearly has the authority to do it.” In his words, years of “case by case, coin by coin” enforcement drove development abroad, and the industry needs holistic rules for digital assets instead. The full letter is published on Ripple's website. The market backdrop matters too: the XRP price remains under pressure after a recent test of $1.25 support and a muted response to Evernorth's Nasdaq listing.

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An Investment Contract Is Not the Token Itself

The letter's central argument separates a digital asset from the investment contract under which it was sold. Ripple holds that an investment contract can qualify as a security without the token itself becoming one, a reading built on the Supreme Court's Howey test, which examines the circumstances of an investment arrangement rather than the nature of the asset. Under the SEC's draft, an investment contract would end once the issuer completes or permanently stops the essential managerial activities it promised investors and makes no new commitments of that kind. Ripple supports that structure but draws a hard line at decentralization. The filing rejects any separate legal test based on how decentralized a network is, arguing that governance participation, node distribution, software contributions and economic control can each be measured in ways that say little about whether an issuer's duties still bind. Instead, the company wants the SEC to ask what an issuer expressly promised investors and whether those promises have been fulfilled or withdrawn, and to preserve that approach in the final rule. The distinction touches the entire altcoin market, since most tokens issued in the last decade face the same classification question. Ripple's practical requests follow from that logic. Crypto exchanges and brokers should be able to rely on a properly filed Form TR, the proposed public filing establishing that an issuer has finished or abandoned its core managerial duties, without worrying that later statements change an asset's legal treatment. Ripple also asks that separated digital assets be treated consistently across the Securities Act, the Exchange Act, the Investment Company Act and the Investment Advisers Act, and seeks clarification on secondary-market transactions under Rule 500, the question of whether routine order types in everyday trading still count as part of an issuer's original arrangement. Galaxy Research has estimated that hundreds of token issuers could eventually use the proposed process.

From a $150 Million Lawsuit to Rulemaking

The safe harbor matters more for XRP holders than the fundraising exemptions. A federal rule defining when securities obligations end would codify the July 2023 court outcome, which found the token itself was not inherently an investment contract and led Coinbase and Kraken to restore U.S. trading. Ripple, which says its fight with the SEC cost more than $150 million, wants that clarity durable enough to survive a change of SEC leadership, since interpretations can be reversed while adopted rules cannot. That durability could matter more for the next bull market than the exemptions themselves. The market side has not waited: our XRP technical analysis tracks the token below its 200-day average, and David Schwartz's account of XRP's payment role shows how much utility stayed hidden through the enforcement years. The SEC can still revise the draft before any final rule.