Key Takeaways
Ripple’s CLO asserts that the SEC’s regulatory authority is strictly limited to securities transactions.
Ripple’s Chief Legal Officer, Stuart Alderoty, expects the Securities and Exchange Commission (SEC) to adopt a more legally sound approach to cryptocurrency regulation this year. He believes that the SEC should focus on established legal principles rather than expanding its authority beyond its legal mandate.
In a statement outlining key principles for securities regulation, Alderoty emphasized that the SEC’s authority should be limited to securities transactions to prevent it from overreaching its jurisdiction.
Alderoty explained the distinction between securities and asset sales using gold trading as an example. He stated that selling a gold bar with a contractual right, title, or interest in a gold mine would likely be considered a security transaction. However, selling the same gold bar without post-sale rights or obligations would be just an asset sale, which the SEC cannot regulate.
Alderoty also expects the SEC to refrain from expanding its jurisdiction based on subjective interpretations of disclosure requirements. He urges the regulator to stay within its legally defined boundaries.
Regarding the classification of digital tokens, Alderoty hopes that the SEC will acknowledge that a token itself is not a security, although it can be involved in security transactions. He also believes that the SEC should abandon the notion of a token “evolving” from a security to a non-security, as he considers it a “made-up fallacy with no legal basis.”
The SEC vs. Ripple lawsuit is expected to conclude this year, especially with the incoming Trump administration and the nomination of Paul Atkins as the new SEC chair. It is anticipated that Atkins’ pro-crypto stance could create a more favorable environment for Ripple, potentially leading to a quicker settlement or even the withdrawal of the case by the SEC.
However, Alderoty emphasizes that the core issue of whether XRP is classified as a security remains crucial. He suggests that the Second Circuit Court’s review could affirm or expand upon Judge Torres’ previous rulings, which have mostly favored Ripple.
Analysts believe that if the SEC’s enforcement approach changes or if the agency drops its appeal, XRP could experience a significant price surge.