Following years of back and forth between the Securities and Exchange Commission and Ripple Labs, a crucial court ruling regarding whether a significant cryptocurrency is a security may occur shortly.
In September, Ripple and the SEC asked a judge to make a decision, and one is anticipated in the first quarter of this year. The argument centers on whether or whether the company’s sale of its XRP coin qualifies as an unregistered security, despite the SEC’s assertions to the contrary. The SEC has sued CEO Brad Garlinghouse and co-founder Christian Larsen in addition to accusing Ripple of raising $1.3 billion in 2020 through the selling of XRP.
The decision’s potential precedent for the larger digital asset market is up for debate, but in any case, it is likely to have an impact on the value of XRP, the sixth-largest cryptocurrency by market capitalization with a total market value of more than $28 billion as of Wednesday afternoon.
“The general impact could be highly specific to the facts of SEC v. Ripple, limiting any broader impact,” said Ashley Ebersole, general counsel at 0x Labs and a former SEC lawyer. “Or the court could release an opinion that reaches more legal issues and has a more dramatic effect.”
Others say the case has been overhyped and really won’t have a major legal impact.
“Regardless of who wins, the actual impact on regulation is near zero other than the fate of Ripple itself and its counsel and executives,” said Ty Gellasch, a one-time counsel to former SEC Commissioner Kara Stein, now president and CEO of the Healthy Markets Association. “If Ripple wins, it will be a pretty significant public relations win even if it’s not an important legal one for the industry. “
If the SEC wins, Gellasch said he expects a day of “chest pumping” and for the SEC and the industry to then move on quickly.
