Ripple Backs SEC’s Proposed Crypto Regulation, Calls for End to Case-by-Case Enforcement

Ripple filed a comment letter with the SEC, voicing support for the agency’s proposed Regulation Crypto Assets and urging it to finalize the rule. As per the company, the proposal allows replacing years of regulatory uncertainty that worked on a case-by-case basis with an established framework of laws, all the while maintaining protection for investors under existing regulations. The proposal’s core idea is that the investment contract, not the token, is the security. Stuart Alderoty, Ripple’s chief legal officer, called that faithful to Howey, the 1946 Supreme Court case that defines an investment contract, and wrote: “What matters is what an issuer actually promised and when those promises end, not a subjective ‘decentralized’ test.” Rule 400, a proposed safe harbor, would let an issuer file a public Form TR certifying that the work it promised buyers is finished or abandoned. Ripple opposes an SEC suggestion to limit it to issuers that fulfilled their promises, arguing that buyers can no longer expect profits from abandoned work either. The letter also rejects sorting tokens into “company-backed” and “network” camps, warning that the split would revive the “implicit” promise standard the SEC dropped in its 2026 interpretation. In one example, a company sending 5% of each sale to buy and burn its own token creates an investment contract, Ripple says, because the code automates a promise to return revenue to holders. On authority, the letter points to Section 28 of the Securities Act and Section 36 of the Exchange Act, which let the SEC exempt “class or classes” of securities. A failed 49-50 Senate vote on September 15 to advance the Digital Asset Market Clarity Act removes none of that power, according to the filing. Ripple also wants a new Rule 400 clause stating that skipping Form TR creates no presumption that a token is tied to an investment contract, since filing could become a litmus test for a future commission. Another fix targets Rule 500(b), which overrides state law for secondary-market trades but excludes dealers with no end date, leaving registered dealers to seek state-by-state exemptions. Ripple’s argument drew heavily on its own legal dispute with the SEC. According to it, after the SEC sued in December 2020 alleging XRP was itself a security, the token fell roughly 70% within days and about $15 billion in market value disappeared, with nearly every exchange open to US customers delisting it or blocking