Key takeout
The SEC is considering classifying XRP as a product during a settlement meeting with Ripple. Regulated treatments at Ethereum are key comparison points in the legal battle over XRP.
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The SEC is considering classifying XRP as a product for its ongoing settlement meeting with Ripple Labs, Senior Fox Business Correspondent Charles Gasparino reported today.
Scoop: @ripple from @Eleanorterrett’s scoop from @ripple’s @One question of weight comparison is whether $XRP continues to trade, making it more productive and has a utility that is not security. I’m told…
– Charles Gasparino (@cgasparino) March 13, 2025
Gasparino said securities regulators are using ether as a benchmark to classify XRP as a commodity or to build cases to maintain the current classification. Ethereum is considered by the SEC to exchange for “pure goods” despite initial funding via the first coin offering (ICO).
According to reporters, Ethereum’s regulated treatments have emerged as an important comparison Points, as Both XRP and ETH were initially used to fund blockchain network development.
Ripple previously revealed that it has not implemented an ICO for XRP. Ripple’s CTO David Schwartz, and other officials argued that XRP is distributed in a different way than the typical ICO model.
Ripple’s distribution model was a point of competition as it was different from decentralized cryptocurrencies. Startup and It elicited scrutiny from regulators like the SEC. This accuses them of selling unregistered securities.
Neither Ripple nor the SEC provide public comment on the latest developments in the settlement discussion.
XRP was judged non-security
In a landmark July 2023 ruling, US District Judge Annalisa Torres determined that XRP is inherently unsecured, especially when traded in the secondary market. However, the court found that Ripple’s direct sales of XRP to institutional investors constitutes the provision of unregistered securities.
Whether digital tokens are considered security is currently determined by their suitability to Howey Test’s investment contract requirements.
The 2023 decision revealed that XRP sales through the exchange would not qualify as a securities offering, as buyers have no direct connection with Ripple and are unaware of the company’s involvement. It was also determined that XRP distributions as compensation or payment for services do not constitute a securities transaction.
The SEC vs. Ripple lawsuit is coming closer to conclusion
Fox business journalist Eleanor Terrett reported on Wednesday that a legal battle between the SEC and Ripple was approaching conclusion.
Ripple’s legal team reportedly negotiated a decision adjustment, which imposed a $125 million fine and a limit on selling XRP to institutional investors.
Terrett said the ongoing discussion focuses on adapting the terminology to reflect recent changes in SEC policies under new leadership.
Regulation clarity is the key to cryptographic ETF approval
In an interview with Blockworks in January, Bloomberg ETF analyst James Seyfert discussed the challenges facing Solana ETF, including the SEC’s classification of the SEC as security and ongoing litigation.
According to Seyffart, the SEC usually seeks clarity and resolution of legal disputes before determining financial instruments related to uncertain regulatory assets.
Although it doesn’t specifically mention XRP, the situation is similar in that regulatory clarity is important for approval. The SEC lawsuit against Ripple over XRP’s status as security was a major hurdle for filing an XRP ETF. It is unlikely that the XRP ETF will be approved until the SEC lawsuit against Ripple is resolved.
If the SEC’s stance on XRP could be reclassified, it would not only affect Ripple’s ongoing litigation, but would significantly increase the likelihood of Spot XRP ETF approval.
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