Ripple’s legal director, Stuart Alderoty, went today to X (formerly Twitter) to share that Ripple sent an additional letter to the working group on the cryptography of the United States. The letter responds to a recent speech from the SEC Commissioner, Hester Peirce, entitled “New paradigm”, Where did she raise an important question: when she stops being part of an investment contract and does it just become a digital asset?
In their letter, Ripple thanked the SEC team for having met them on May 20, 2025 and offered new reflections on the issue. Ripple argued that most of the cryptocurrencies negotiated today are not titles. They underlined the legal analysis of Lewis Cohen and others, who says that when the cryptographic tokens are sold on the secondary markets – such as exchanges – they generally do not respond to the legal definition of security.
Ripple also opened its doors to last year’s court decision by Judge Torres in the dry trial against Ripple. The judge decided that, although some of the first sales of XRP from Ripple to large investors counted as investment contracts, the XRP token itself is not a guarantee when it is sold on the secondary markets.
Ripple recognized the concern of the SEC concerning the bad actors abusing the cryptographic markets, but declared that it was at the Congress, not at the dry, to modify the laws. They warned against vague rules like deciding if a token is “Fully functional” Or “Sufficiently decentralized”Because these can confuse the market.
Instead, Ripple suggested a clearer legal framework. For example, if a crypto token has been sold once within the framework of an investment contract, it must be considered separate from this contract when:
- All the promises made by the issuer to the original buyer have been held.
- The current holder has no legal right to demand anything from the transmitter.
Ripple also proposed a refuge rule to protect honest cryptography projects that still develop, helping them to avoid legal risks while following clear guidelines.
In addition, Ripple has recommended to use the maturity of a cryptographic network – its size and its establishment – rather than vague ideas such as decentralization, to decide whether it should always be regulated as security. They suggested that tokens on open networks and without authorization with great market value, operational for years and without a part of control, should no longer fall under securities laws.
