Ripple’s XRP token experienced a significant surge on Thursday following a ruling by a judge in the Southern District of New York stating that it is “not necessarily a security on its face.” This decision provided hope to cryptocurrency investors who were relieved by the possibility that other alternative coins might also be exempted from the securities classification. In response to the news, several other cryptocurrencies saw notable gains, with Polygon’s matic token rising by 17.82%, Litecoin and Solana jumping by 18.35%, and Cardano’s token advancing by 20.31%. Bitcoin and ether, the two largest cryptocurrencies, also experienced a boost, increasing by more than 4% and 6% respectively.
Securities vs. Commodities
The ruling has been seen as a significant step forward for the industry, providing clarity on the distinction between securities and commodities. Industry experts expect that the judgment on XRP will have implications for several other tokens, potentially categorizing them as non-securities. Chris Martin, the head of research at Amberdata, emphasized the impact of the ruling on ongoing cases and suggested that the Securities and Exchange Commission (SEC) will need to revise its strategies.
Coinbase to Allow XRP Again
Coinbase, which had previously removed XRP from its trading platform, announced that it would once again allow trading of the asset. Gemini also expressed interest in listing XRP for spot and derivatives trading. This ruling also has implications for the sales of XRP by Ripple, which have been determined to constitute securities. The judgment could bring other initial coin offerings (ICOs) into the spotlight, raising questions about the involvement of exchanges in ongoing SEC cases.
The SEC Trial
The ruling represents the latest development in a three-year legal battle between Ripple and the SEC. However, there is a possibility that some of these findings may be appealed and reversed, as the court is expected to set a trial date separately.
In 2020, the SEC sued Ripple for selling XRP without registering it with the agency, alleging a breach of U.S. securities laws. This ruling is considered a significant hurdle to clear for crypto assets as they continue to navigate a challenging macroeconomic environment and face pressure from U.S. regulators.
Impact on the Crypto Sector
The positive ruling also had an impact on other companies in the crypto space. Coinbase’s shares rose over 24% amid optimism that the company could succeed in its own legal battle with the SEC. Robinhood and Block, both offering crypto trading services, experienced increases of 4.3% and 7% respectively. Bitcoin proxy Microstrategy also saw a gain of almost 12%, while miners surged with double-digit percentage increases.
Although investors are optimistic about the ruling, it is not a straightforward victory. Some legal experts argue that the notion that XRP is not a security is incorrect. Nevertheless, the ruling provides relief for XRP holders. The court’s decision was divided into three categories: institutional sales, programmatic sales, and other distributions. The court sided with the SEC regarding institutional sales, considering their securities transactions. However, Ripple was successful in the case of programmatic sales and other distributions.