In a major development for the cryptocurrency industry, the U.S. Securities and Exchange Commission (SEC) has ended its appeal against Ripple Labs regarding the legal status of the XRP token. This decision marks a significant shift in regulatory posture, reflecting broader changes in crypto oversight under the new administration.
Key Takeaways
- The SEC has dropped its appeal against the July 2023 ruling that found XRP sales on public exchanges do not constitute securities transactions.
- The decision signals a potential retreat from aggressive crypto enforcement as regulatory priorities shift.
- While Ripple secured a win regarding public sales, the court still held that institutional sales of XRP did violate securities laws, leading to a $125 million fine.
- The move follows a broader SEC pullback on crypto lawsuits, including against Coinbase and Kraken.
Background: SEC v. Ripple Labs
The SEC filed its lawsuit against Ripple Labs in December 2020, just weeks before the end of President Trump's first term. The agency alleged that XRP, the digital token associated with Ripple, functioned as an unregistered security, making Ripple's sales unlawful.
In July 2023, U.S. District Judge Analisa Torres issued a pivotal ruling:
- XRP sold on public exchanges (retail sales) is NOT a security.
- XRP sold directly to institutional investors IS a security.
While the decision was a partial victory for both sides, it was widely seen as a setback for the SEC in its efforts to classify cryptocurrencies as securities.
SEC Drops Appeal: What This Means for Crypto Regulation
On March 19, 2025, Ripple CEO Brad Garlinghouse announced on X (formerly Twitter) that the SEC had officially ended its appeal, calling it a "long overdue surrender." Ripple's Chief Legal Officer Stuart Alderoty emphasized that the company is now "in the driver's seat" and will evaluate next steps, including its own cross-appeal.
This decision follows a broader pattern of SEC retreats in crypto enforcement:
- The agency dropped lawsuits against Coinbase and Kraken, two of the largest U.S.-based crypto exchanges.
- The SEC is considering settling its fraud case against Justin Sun, a key figure in the digital asset space.
Under President Trump's second term, regulatory changes have accelerated:
- The new SEC Chair nominee, Paul Atkins, is seen as pro-crypto, replacing Gary Gensler, who was widely criticized by the industry.
- The shift signals a move away from aggressive enforcement and toward clearer regulatory frameworks.
What's Next for Ripple and the Crypto Industry?
While the SEC's retreat is a major win for Ripple, legal battles aren't over:
- Ripple's $125 million fine remains on hold pending the outcome of its appeal to the 2nd U.S. Circuit Court of Appeals.
- Ripple may still seek a cross-appeal to challenge aspects of the ruling on institutional sales.
- The crypto industry will push for clearer regulations, potentially through new legislation or regulatory guidance under the Atkins-led SEC.
Final Thoughts: The SEC's decision to end the appeal represents a major shift in U.S. crypto oversight. While challenges remain, this could be the beginning of a more balanced regulatory approach, moving away from enforcement-first tactics toward proactive rulemaking.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
