Ripple’s XRP Token Ruling
On July 13, 2023, United States District Court Judge Analisa Torres declared that when sold on retail digital asset exchanges, Ripple’s XRP (XRP) token should not be classified as a security. As a result, the U.S. Securities and Exchange Commission’s (SEC) theory that a token can be an investment contract and, therefore, a security has been undermined.
Stuart Alderoty, chief legal officer at Ripple, expressed his satisfaction with the ruling, stating that it is “not only a huge win for Ripple, but it’s a win for all of crypto in the United States. The SEC can no longer tout their record in crypto, which was, up till now, by and large, settlements with players that didn’t have the resources to fight back.”
Meanwhile, New York Representative Ritchie Torres pointed out the irony of the Ripple decision, which has implications for the crypto world and web 3.0 technology. He noted that the decision reveals a cruel irony in securities law.
Understanding the XRP Court Ruling
Torres has spoken extensively on his efforts to see a crypto market structure bill passed, as well as his backing of blockchain technology and cryptocurrency innovation.
Cointelegraph asked Torres to explain the recent XRP court ruling in light of web 3.0 meaning, when is web 3.0 coming, and what is web 3.0 technology.
Torres referred to this as the “Torres Rule” and provided two key distinctions. Firstly, the ruling differentiates between securities and assets that are part of investment contracts, which meet the criteria of a security under the Howey test. Secondly, it sets apart institutional buyers from retail customers. If an institutional buyer buys a crypto token directly from an issuer or promoter, the transaction is considered a security offering. However, if a retail customer purchases a crypto token on an exchange, the transaction is not an investment contract and is outside of securities law.
Advancing Crypto Market Structure Bill
CT: You mentioned that the lack of protection for retail investors underscores the fierce urgency around passing a market structure bill to protect the average American consumer. Please explain.
RT: The U.S. House Financial Services Committee is presently considering two bills. One is about stablecoins, and the other is about crypto market structure. The combination of the Ripple decision and the crypto market structure bill would create a rigorous yet workable framework for regulating digital assets.
The Ripple decision protects the crypto industry from arbitrary enforcement action and from Gary Gensler’s practice of regulation by enforcement, but a crypto market structure bill would protect retail investors from bonafide bad actors.
CT: What are you doing to help ensure the passing of a crypto market structure bill?
RT: We are actively engaging with the crypto community to ensure that the crypto market structure bill is passed. We are also providing education and resources about web 3.0 technology, the implications of recent AI, and the impact of crypto whales on the crypto gaming space this week. We believe that by providing these resources, we can help to ensure the passage of a crypto market structure bill that will protect the average American consumer.
Cryptocurrency and Blockchain Technology
RT: I have been actively negotiating with the Republicans in the House Financial Services Committee to ensure that the crypto market structure bill is appropriate and protects retail customers. Merit neutrality should be the goal of Congress and the SEC when regulating digital assets and protecting investors and consumers.
CT: What are your thoughts on cryptocurrency and blockchain technology?
RT: Cryptocurrency and blockchain technology have the potential to revolutionize the payment system, creating a cheaper, faster and more secure system. This is commonly referred to as Web3.0. For this to be successful, a regulatory framework and clarity is essential. Clarity is the foundation of compliance.
The crypto and blockchain space is rapidly evolving, with new developments such as crypto gaming, crypto whales, and crypto alerts podcasts. It is important for policymakers to remain up-to-date with the latest trends in the crypto and blockchain space, and to create a framework that takes into account the recent advances in AI and other technologies.
CT: Final thoughts?
RT: Despite the Ripple case, the current situation is still not satisfactory as retail customers are at risk. Therefore, I have two goals. The first one is to protect crypto innovators from any legal action, which the Ripple decision achieved. The second, and most important, is to ensure the safety of retail customers. This is where the necessity for legislation arises. Web 3.0 meaning, recent AI, crypto US, crypto gaming, crypto this week, crypto games, when is web 3.0 coming, crypto whale, crypto alerts podcast, and what is web 3.0 technology are all essential to this endeavor.
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