Ripple Urges SEC to Finalize Crypto Rules After $150 Million Legal Battle
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Ripple urged the US Securities and Exchange Commission to finalize proposed digital asset rules on October 20, following a legal battle in which the firm spent more than $150 million seeking regulatory clarity.
Chief Legal Officer Stuart Alderoty confirmed the submission backs the agency’s proposed Regulation Crypto Assets framework, arguing that years of case-by-case enforcement have pushed domestic innovation overseas.
The SEC introduced the framework in August, outlining clear boundaries to help crypto companies understand their obligations without facing protracted court challenges.
Safe Harbours and Capital Thresholds
The SEC proposal introduces exemptions designed to let qualifying digital asset issuers raise capital without full public registration. Startups could raise up to $5 million over four years under one provision, while a separate exemption permits up to $75 million within a 12-month window under stricter financial disclosures.
A critical piece of the draft creates a safe harbour that releases a token from investment contract rules once an issuer satisfies its original network commitments.
Ripple Chief Legal Officer Stuart Alderoty argued the agency possesses full authority to implement the framework. Under the standard Howey test, regulatory scrutiny should evaluate specific issuer promises rather than treating secondary token sales or decentralization metrics as automatic triggers for securities status.
Industry Pushback Across Major Networks
Ripple joined a broader coalition of blockchain foundations that submitted recommendations before the comment window closed. A joint filing by Chainlink, Hedera, Stellar, Aptos, Avalanche and Cardano urged the commission to explicitly define digital commodities within the formal rule text.
The push reflects widespread industry fatigue with retroactive enforcement. Ripple spent more than $150 million in legal fees battling the SEC, a figure few smaller Web3 startups can survive.
The SEC is reviewing the comment letters ahead of a full commission vote on the final language for Regulation Crypto Assets.
Questions & Answers
Q.What exemptions does the SEC's proposed framework offer for capital raising?
What exemptions does the SEC's proposed framework offer for capital raising?
The framework allows startups to raise up to $5 million over four years without full public registration. A second exemption permits capital raises of up to $75 million across a 12-month period, subject to stricter financial disclosures.
Q.How does the draft regulation address when a token stops being treated as an investment contract?
How does the draft regulation address when a token stops being treated as an investment contract?
The draft introduces a safe harbour provision that exempts a digital token from investment contract rules once the issuer satisfies its initial network commitments. Regulatory scrutiny would focus on specific issuer promises rather than secondary sales.
Q.What specific changes did blockchain organisations request in their joint submission?
What specific changes did blockchain organisations request in their joint submission?
A coalition including Ripple, Cardano, Chainlink, and Stellar submitted recommendations asking the SEC to explicitly define digital commodities in the formal text. They argue that years of retroactive enforcement have driven domestic innovation to foreign jurisdictions.
Q.What are the next steps before Regulation Crypto Assets can take effect?
What are the next steps before Regulation Crypto Assets can take effect?
The Securities and Exchange Commission is currently reviewing submitted comment letters following the closure of the feedback window. The full commission must then hold a vote on the final language before the regulatory framework can be formally adopted.
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