According to recent rumors, the SEC is considering reclassifying the XRP token as a commodity. The commission appears to be comparing the previously reclassified ETH and XRP.
Today, the Vermont regulatory authority has taken action against Coinbase due to the SEC's new cryptocurrency task force. In 2022, the state financial regulatory authority claimed that staking services violated securities laws, but now it is not maintaining this position. These exchanges could help establish a precedent for Ripple.
Ripple Continues Discussions with the SEC
The SEC vs. Ripple case is a very hot issue in the cryptocurrency community. Under Gary Gensler, the commission has claimed that XRP is an unregistered security and has sought to block all sales.
Yesterday, rumors circulated that the case could be resolved soon, and Ripple is said to be negotiating broad changes. A new perspective has emerged:
"One of the issues the commission is considering is that XRP continues to trade, and whether it has more appropriate utility as a commodity rather than a security. The example of Ethereum is important. ETH was clearly issued through an ICO and... is no different from XRP, but Ripple was sued and Ethereum was not. ETH has since morphed into a commodity." - Charles Gasparino
Such a proposal could represent a major change in US cryptocurrency regulation, but there are several reasons why it is possible. First, Commissioner Hester Peirce has argued that the SEC may not consider some assets as securities, and has already reclassified memecoins.
The commission is also planning new cooperation with the CFTC, the top commodity regulator in the US.
Already, the new post-Gensler SEC has laid important groundwork for the reclassification of XRP. If Ripple and the SEC can reach an agreement, XRP would be subject to much less stringent regulation, which could have a positive impact on its market price.
XRP Shares Many Similarities with Ethereum
If the SEC drops its lawsuit against XRP, the altcoin could be evaluated based on the distributed functionality and utility within its network, rather than as an investment contract. This would be similar to how Ethereum was evaluated.
Such a change would emphasize XRP's role in facilitating real-time transactions on the network, aligning its characteristics more with a commodity.
Technically, this would be easier to assess. Ripple has always provided payment infrastructure for various global banks and payment services.
Additionally, the SEC may point to the Ripple case as establishing precedents for other legal efforts. In 2022, Vermont and several US states sued Coinbase, claiming that staking services violated securities laws. Today, Coinbase's chief legal officer announced that Vermont has withdrawn the charges due to a new paradigm:
"The SEC has announced the formation of a new task force to provide guidance on rulemaking for cryptocurrency products and services. Considering the possibility of new federal regulatory guidance, the department will withdraw the pending show cause order." - Content of Vermont's dismissal
In other words, one state has already claimed that the commission's new guidance has invalidated its previous claims. If the SEC decides that it was too harsh on Ripple in the past, it has the right to reclassify XRP.
Ultimately, if XRP is classified as a commodity after April 16th, the possibility of an XRP ETF approval will immediately increase or be confirmed. Overall, such a scenario would be very positive for the third-largest altcoin.
