Key Points

  • US SEC has expressed discomfort with the recent XRP rule, saying that the Judge behind it was incorrect.
  • The landmarking ruling stirred the crypto market as analysts and investors called for counter lawsuits against SEC’s crypto onslaught and hinted at primary markets being termed non-securities-proven markets.

Per a recent statement, the US SEC has hinted that it is considering various avenues for the decision made in a Ripple case ruling that claims the native coin, XRP, is not a security. 

The Judge behind the Ripple XRP ruling wasn’t correct- US SEC

In a statement regarding Ripple’s partial win in a case against the US SEC, the US SEC said it is “considering the various available avenues for further review.” It has suggested that it is exploring options to appeal the ruling that claims the sale of XRP to retail traders is not a security.

The regulator claimed that the ruling goes against the Howey Test, the fundamental set of rules determining if an asset falls under the category of securities. Notably, the US SEC had commended the Judge for acknowledging Howey Test and ruling that the sale of US SEC to secondary markets was classified as a security.

At the time, the US SEC claimed that the Judge was fair to rule out Ripple’s makeshift tests to determine whether an asset was a security and stood by the existing tests. The US SEC made these comments in a lawsuit against Terraform Labs, expressing many issues with the Court’s decision in the Ripple XRP case.

“Contrary to Defendants’ assertions, much of the Ripple ruling supports the SEC’s claims in this case and rejects arguments Defendants have raised here. However, with respect to the Programmatic and other sales, the SEC respectfully avers that Ripple conflicts with and adds baseless requirements to Howey and its progeny,” the SEC stated

The regulator added,

“Respectfully, those portions of Ripple were wrongly decided, and this Court should not follow them. SEC staff is considering the various available avenues for further review and intends to recommend that the SEC seek such review.”

These comments come days after the SEC chair Garyy Gensler expressed dissatisfaction with the ruling. In an interview with Yahoo Finance on July 17, he expressed that the regulator was pleased with the partial win that secondary markets encompass securities offering but greatly disappointed with a ruling that Primary markets are excluded.

He expressed that they are looking into that and will take further steps if necessary. Keep watching Fintech Express for updates on regulation and other fintech-related developments.