Ripple Verdict: What It Means for the Future of Crypto
The Ripple verdict is clear: the competent court decides for XRP. The cryptocurrency is therefore not considered a security – an assessment that should also apply to many other coins. What does the end of the Ripple vs SEC conflict mean for the future of crypto?
Ripple verdict: Court decides for XRP
The long-awaited Ripple verdict was finally delivered yesterday in the District Court of the Southern District of New York. The court ruled in favor of XRP, rejecting the SEC’s assessment on most counts.
Accordingly, XRP cannot be legally classified as a security in the USA. Trading the investment on crypto exchanges and in other cases – for example as a means of payment for the work of programmers – is now officially not trading in securities.
The court’s decision triggered extreme euphoria on the crypto market. The entire market increased in value by almost five percent in just a few hours. XRP as the center of the dispute even increases by 70 percent in the 24-hour trend.
At the same time, Presiding Judge Analisa Torres agreed with the SEC’s assessment on at least one point. The sale of XRP by the developer Ripple as institutional investors corresponds to an investment contract and is therefore to be treated like a securities trade.
What does the verdict mean for the future of crypto?
Even before the verdict, the legal dispute between the SEC and Ripple was classified as very important for the future of the crypto industry in the USA. With its lawsuit, the SEC attacked one of the largest cryptocurrencies issued by a central company.
Many experts suspected that the SEC’s lawsuit was intended to set a precedent. After a success in court, the authority wanted to refer to the judgment in further disputes with the crypto industry in order to supervise the industry or to carry out interventions.
However, for this strategy to work, the regulator would have had to win in court. The fact that institutional investments in closed financing rounds are legally equated with securities trading according to the current status is not sufficient for this.
The SEC has maintained for the past few months that the truth is that the majority of all cryptocurrencies are so centralized that they require securities status in the United States. Publicly, the authority expressed only a few exceptional cases – for example Bitcoin and Ethereum .
Because the New York court contradicted the legal classification of XRP as a security, the same should apply to most other cryptocurrencies. Therefore, not only did the Ripple price explode as a result of the verdict, but also the value of other cryptocurrencies such as Cardano, Solana, Polygon or Stellar, which the SEC also described as securities in lawsuits from June.
After around a year and a half of the bear market, the decision could be the spark that leads to the start of a new bull market. It’s the first major setback the SEC has seen in recent memory.
Since spring 2023 in particular, the Security Exchange Commission has been taking very aggressive action against the crypto industry. Many investors sold their cryptocurrencies for fear of regulatory action. The bear market continued.
Experts such as Raoul Pal are expecting a new bull market to begin this year. Other voices speak of the end of the ongoing low as of 2024.
US politics could build on court decision in Ripple case
Future US policy could build on the court decision in the Ripple case. US MP and lawyer Tom Emmer has already expressed his satisfaction with Judge Torres’ verdict.
“The Ripple case is an important step in recognizing that a token is [legally] distinct from an investment contract, whether or not it is part of one. Now we should make this knowledge law,” Emmer wrote on Twitter.
The Republican MP is one of the biggest supporters of cryptocurrencies in US politics. Consequently, he is one of the most active critics of the SEC and its anti-crypto policy.
Emmer believes the next logical step for policy is the passage of its Securities Clarity Act . He introduced the Securities Clarity Act in May with the support of fellow Democrat Darren Soto. It is intended to clarify what is meant by a security and that cryptocurrencies do not fall into this category.
Even if the SEC had succeeded in court, most of the world would not be directly affected. However, the authority could have inhibited investments in the crypto market and the development of the industry in the long term.
Was Ripple’s acquittal a wrong decision?
While Emmer is deeply optimistic about further developments, other lawyers criticize Ripple’s acquittal of illegal securities trading as a wrong decision.
Some legal experts criticize that a distinction based on the type of buyer is unrealistic. Why should a cryptocurrency be considered a security when bought by institutions but not in private commerce?
“This decision raises more questions than it answers. How can one thing be a security in one transaction but not in another?” asked attorney Preston Byrne .
In his estimation, the creation of a new law, as Tom Emmer is planning, is necessary to prevent such absurd assessments. According to Byrne, the crypto industry should not feel too safe.
Above all, a decision in a case involving Telegram and the cryptocurrency TON gives cause for concern. Accordingly, the decision at that time was the opposite of that in the Ripple case.
Other lawyers believe the presiding judge lacks expertise in dealing with the applicable laws. Lawyer Bryan Jacoutot writes : “I don’t want to belittle the fact that this is definitely a victory for Ripple. However, it could be a short-lived victory. I think the judge misunderstood the law.”
According to Jacoutot, the court distinguished between private investors and institutions because the seller is not known on crypto exchanges. Accordingly, there is no expectation of financing a company. However, the lawyer considers this reasoning to be irrelevant.
Nevertheless, the first consequences can already be seen. Several US crypto exchanges are already offering XRP for trading again, including Coinbase, Kraken and Gemini. Coinbase suspended trading in the cryptocurrency due to the legal dispute in January 2021.
In an official statement, the SEC believes that it has won the legal dispute due to the split verdict. The authority