Key takeaways
- Ripple’s CLO argues that the SEC’s regulatory authority is strictly limited to securities transactions.
- A token itself is not a security, although it may be involved in a security transaction, according to the manager.
Ripple’s general counsel Stuart Alderoty expects the SEC to adopt a more legally sound approach to crypto regulation this year, focusing on established legal principles rather than expanding its authority beyond its legal mandate.
On a Tuesday statement Alderoty outlined key principles of securities regulation and insisted that the SEC’s authority be limited to securities transactions to prevent the regulator from overstepping its jurisdiction.
“Are you selling a gold bar with a contractual right, title or interest in my gold mine? Likely a security transaction,” he explained, using gold trading as an example to illustrate the difference between securities and asset sales. “Are you selling the same gold bar with no rights or obligations after the sale? Just an asset sale — the SEC can’t police that.”
Alderoty also expects the SEC to avoid expanding its jurisdiction based on subjective interpretations of disclosure requirements, and urges the regulator to stay within its legally defined boundaries.
Regarding the classification of digital tokens, Alderoty hopes that the SEC will recognize that a token itself is not a security, even though it may be involved in security transactions.
He also expects the SEC to abandon the notion that a token “evolves” from a security into a non-security company — a “made-up mistake with no legal basis,” he argued.
The Ripple process is expected to finish
With the inauguration of the Trump administration and the nomination of Paul Atkins as the new SEC chairman, there is widespread expectation that the year-long legal battle between the US securities watchdog and Ripple will end sometime this year.
Given Atkins’ known pro-crypto stance, his influence could create a more favorable environment for Ripple, potentially leading to a faster settlement or even the SEC withdrawing the case.
However, Alderoty stresses that the core issue – whether XRP is classified as a security – remains key. He suggests that the Second Circuit Court’s review could confirm or even expand on Judge Torres’ previous rulings, which have largely favored Ripple.
Analysts believe that if the SEC’s regulatory approach changes or if the agency drops its appeal, XRP could experience a large price increase.
