The long-running legal dispute between the US Securities and Exchange Commission (SEC) and Ripple Labs continues to see some surprising twists and turns. Recall that the SEC has raised charges against Ripple, accusing company representatives of unregistered sales of XRP as securities.
“XRP is just a worthless code”.
Recently, Judge Torres issued a statement that turned the tide, saying that XRP should not be classified as a security in many cases. Now, as another key hearing approaches, the SEC has filed a motion to appeal the earlier decision on programmatic and other sales of XRP.
In that filing, however, the Commission made a significant change, describing XRP as “just computer code with no inherent value.” This statement sparked controversy. Cryptocurrency observer and lawyer Bill Morgan believes that the SEC is trying to convince the courts by this means that cryptocurrencies should not be treated as commodities, which is contrary to previous decisions, such as in the case of the Gram token.
Bill Morgan points out: “It appears that the SEC is trying to simplify its task by convincing the courts that cryptocurrencies do not have inherent value according to the Howey test. This means that issuers must find a way to give cryptocurrencies a value independent of itself.”
XRP’s non-obvious value
Is the SEC trying to find a shortcut to solving the problem? Morgan says this approach is misguided because the value of XRP is derived from the token and cannot be separated from the XRP Ledger (XRPL) system. This is similar to the importance of the wheels in the machine that changed our world; their value lies in their interaction, not in individual components.
The question arises, why is the SEC trying to treat different cryptocurrencies differently? John E. Deaton, another prominent cryptocurrency lawyer, argues that “the SEC has completely lost its mission and purpose.”
Ripple has tried for years to get clarity on regulation from the SEC, but has received only vague guidance. Bill Hinman famously stated that Ethereum and Bitcoin are not securities, but made no comment on XRP.
Ripple and XRP in troubled waters
Meanwhile, Ripple and XRP were paying the price for this regulatory uncertainty. Before the lawsuit, XRP was the second-largest cryptocurrency on the market and was considered a potentially revolutionary tool in the banking system. However, it is currently under the shadow of doubt and legal disputes, which have negatively affected its market value.
As a result, one may wonder whether the SEC is doing the right thing in its regulatory actions towards cryptocurrencies, or whether it may have lost its way, leading to uncertainty and a decline in the value of XRP, which whatever it may be still appears to be a promising tool for the future of finance.