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Ripple Still Confined to Judge Torres' Ruling

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Category: Cryptocurrencies
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Ripple Still Confined to Judge Torres' Ruling

1. The Ruling and XRP's Status

The July 2023 court ruling provided important clarity regarding XRP and its classification under U.S. securities law. However, it was a partial victory for Ripple, with nuanced findings:

  • XRP is not classified as a security when sold to retail investors (through public exchanges).

  • However, XRP could still be considered a security when sold to institutional investors, including banks or financial institutions, depending on the circumstances. The court ruled that the sale of XRP to institutions (in the context of certain institutional sales or contracts) could meet the definition of an investment contract under U.S. securities law, classifying it as a security.

2. What Happened with the SEC's Appeal?

The SEC initially appealed parts of the ruling to challenge the court’s finding that XRP is not a security in certain cases (specifically retail sales). However, the SEC withdrew its appeal in March 2025, leaving the court ruling intact.

Despite the SEC withdrawing the appeal, the core ruling remains:

  • XRP is not a security in retail sales.

  • XRP may be considered a security in institutional transactions, depending on the nature of the transaction.

3. Can Ripple Sell XRP to Banks or Institutions?

Under the current legal framework:

  • Ripple can still sell XRP to financial institutions (like banks) or other large entities. However, these sales could be classified as the sale of securities, depending on the terms of the sale.

  • XRP as a security for institutions: If Ripple sells XRP in a manner that meets the criteria for an investment contract (such as where expectations of profits are part of the transaction), those sales could be classified as securities transactions and fall under U.S. securities laws.

  • Ripple must ensure that any sale of XRP to institutions is structured in a way that does not violate securities regulations or must comply with the requirements for securities transactions, such as registration with the SEC.

4. The Path Forward for Ripple and XRP

Ripple now has a clearer path to sell XRP to institutional clients, but with restrictions and considerations:

  • Ripple may need to work with legal advisors to structure transactions in a way that avoids triggering securities laws.

  • If XRP is considered a security when sold to banks or financial institutions, Ripple must ensure compliance with securities laws, which could include registering the offerings or ensuring they qualify for exemptions.

Key Takeaways:

  • XRP is not a security when sold to retail investors, meaning exchanges and public sales (to individuals) can continue without issue.

  • XRP may be a security when sold to institutions (like banks), based on how the transaction is structured, meaning Ripple must ensure these sales comply with securities laws.

  • Ripple must be cautious when selling XRP to institutions to avoid regulatory scrutiny and potential violations of securities laws.

Conclusion:

Even though the SEC appeal was withdrawn, the ruling still allows for XRP to potentially be classified as a security when sold to institutions. This means Ripple can sell XRP to banks, but these sales must be carefully structured to avoid regulatory issues. It’s not a blanket "yes" for institutional sales—the classification of XRP as a security in such transactions still depends on the specifics of the sale.