A significant regulatory development has emerged as the U.S. Securities and Exchange Commission (SEC), working with the Commodity Futures Trading Commission (CFTC), established a joint framework that classifies XRP as a digital commodity. The framework, released on Wednesday, places XRP on a specific list of non-security tokens alongside Bitcoin (BTC) and Ethereum (ETH), and groups it with traditional global commodities like gold, oil, wheat, and natural gas.
This classification is noteworthy as it suggests these digital assets derive value from decentralized systems and market forces rather than from a central managing team, drawing a key distinction from securities. The framework also indicates a potential move away from relying solely on the Howey Test for evaluating crypto assets. While the XRP community views this as a positive narrative shift, skeptics note the inclusion of meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) on the same list, questioning the weight of the classification.
In a related but separate event, XRP's price declined following a joint filing by Ripple and the SEC proposing a settlement to end their long-running legal battle. The filing, submitted to the U.S. District Court for the Southern District of New York, seeks to resolve the enforcement action initiated in December 2020. The price drop is attributed to a 'buy the rumor, sell the news' dynamic, as the settlement had been widely anticipated. Furthermore, the settlement is only proposed and awaits final approval from the presiding judge, creating lingering uncertainty.
It is crucial to distinguish that this negotiated settlement resolves the enforcement action against Ripple without establishing a broader legal precedent that XRP is not a security. The 2023 partial summary judgment, which found programmatic sales to retail buyers did not constitute securities transactions while institutional sales did, remains a key reference. A final court order, which could take weeks to months, is needed to remove the last legal overhang, potentially reopening doors for institutional products and exchange re-listings.
