Ripple urges SEC to clarify token securities status under new rules

Regulation Crypto Assets Proposal and Ripple’s Concerns

On October 20, Ripple responded to the SEC’s Regulation Crypto Assets proposal, expressing general support for the initiative but advocating targeted amendments to Rule 400. This rule seeks to define a process for classifying certain digital assets as no longer investment contracts. Ripple emphasized that tying a token to securities-law obligations indefinitely, just because its issuer once made developmental promises, could stifle the industry’s growth and innovation.

The SEC’s draft rules separate the digital asset itself from the initial investment contract through which it might have been offered. According to the proposal, an issuer could file Form TR when it has completed or ceased the core managerial commitments made to investors. Ripple endorsed this procedure but requested that the SEC also consider other scenarios, such as contracts ending when promises have expired, are abandoned, or otherwise terminate.

This distinction is critical, as legal obligations to investors can lapse even if project developers continue to work on the underlying blockchain network.

Ripple argued that tying securities-law status solely to decentralization tests is less objective than focusing on specific contractual obligations, pointing to its historic disagreement with the SEC over such assessments.

The company’s letter also called for a no-presumption clause to protect issuers who opt not to submit Form TR. Ripple cautioned that regulators might otherwise view the absence of a filing as ongoing evidence that a digital asset remains linked to a securities investment contract.

Calls for Clearer Protections for Crypto Exchanges and Intermediaries

Ripple urged the SEC to provide more explicit protections for cryptocurrency exchanges, brokers, and dealers. The company proposed that these intermediaries should be able to rely in good faith on Form TR certifications that an asset is no longer a security, without concern that the SEC may later reinterpret the issuer’s filing.

Ripple also suggested amendments to Rule 500, which addresses federal preemption related to certain secondary-market digital asset transactions. As drafted, some provisions could create compliance risks for intermediaries if an issuer falls behind on required regulatory filings, a factor outside the intermediary’s control.

These concerns arise in the context of the SEC’s ongoing efforts to clarify the classification of digital assets, including guidance issued in 2026 that distinguished between crypto tokens and the investment contracts associated with particular transactions.

Ripple’s requests directly reflect insights from its protracted legal dispute with the SEC regarding the status of XRP.

That case, which concluded in 2025 with the dismissal of appeals by both parties, left unresolved issues about how institutional sales and exchange transactions are treated under securities law.

The company’s latest filing seeks to ensure regulatory rules extend to all industry participants rather than applying only to Ripple’s specific circumstances.

Earlier in the year, Ripple also asked the SEC for clarity on the regulatory status of XRP and other major cryptocurrencies.

Meanwhile, similar issues are under legislative review through the CLARITY Act, signaling ongoing Congressional interest in digital asset regulation.

Ripple has previously voiced its support for such statutory exemptions and reiterated that clear guidance is necessary to avoid prolonged regulatory disputes in the future.

Mini dictionary: CLARITY Act, a proposed legislative framework in the US intended to establish clear regulatory standards for digital assets and offer exemptions for certain cryptocurrency activities previously regarded as ambiguous under federal securities law.