Ripple Urges SEC to Adopt Crypto Rules With Safeguards for Traders

Ripple threw its support behind the U.S. Securities and Exchange Commission's proposed framework for crypto fundraising and trading in a comment submission dated Oct. 20, arguing that existing law already authorizes the rules even though the CLARITY Act remains stalled. Chief Legal Officer Stuart Alderoty and other Ripple attorneys endorsed adoption conditioned on safeguards for trading. The company's central position is that the investment contract, rather than the crypto asset itself, constitutes the security.

Under the SEC's proposed Regulation Crypto Assets, certain crypto fundraising transactions would qualify for registration exemptions, permitting offerings of as much as $5 million over four years or up to $75 million per year. Issuers would still have to provide disclosures and would remain subject to antifraud protections. The public comment window closed Oct. 20.

Ripple contends that token rights such as access or governance features — including voting on project rules — can exist without conferring company ownership, and that shared hopes for price gains alone do not establish a common enterprise. It rejects general decentralization checklists and company associations as substitutes for analyzing an issuer's promises, according to news.bitcoin.com. At the same time, Ripple argues that arrangements channeling company revenue toward token-holder returns, such as automated buybacks or burns, can create investment contracts.

On the proposed safe harbor, conditional protection would kick in once promised essential managerial efforts end — activities deemed essential to the venture's success and to expected investor profits. Ripple backs eligibility when those promises are fulfilled, abandoned or terminated, as long as issuers make and intend no new such commitments, with antifraud liability continuing. A public certification known as Form TR would explain why an investment contract has ended for issuers seeking the safe harbor.

The company also wants protection for good-faith reliance, prospective application of later SEC determinations that conditions were not satisfied, and no presumption of investment-contract status simply because a filing was not made, plus consistent treatment across federal securities laws. Ripple warns that excluding dealers from relief against state registration requirements could restrict access, widen trading spreads and push activity offshore. Its proposed adjustments would cover ordinary broker-dealer trading while retaining exclusions for issuers, underwriters and dealers involved in issuer distributions, with state oversight of intermediaries preserved.

Additional requests cover continued relief when issuer filings become overdue and opposition to income or wealth thresholds for resale buyers. Ripple is also seeking confirmation that holding, lending, pledging, collateralizing or staking tokens alone does not require holder registration or reliance on an exemption, does not alter investment-contract status, and does not remove relief from state registration and qualification requirements.