Last week, the crypto community celebrated a U.S. federal court case that ruled Ripple’s XRP token does not make up illegal securities sales — but only in some cases.
Though many celebrated the ruling, it’s not a true win for crypto.
Judge Analisa Torres, who presided over the case, approved the SEC’s motion with regard to institutional sales of Ripple’s XRP token, meaning that the cryptocurrency is a security when used for institutional sales. However, Torres denied the SEC’s motion related to programmatic sales of XRP, among other circumstances, which means she ruled XRP is not a security when sold to the broader public.
“Lining up the summary judgment in favor of the SEC next to the summary judgment in favor of Ripple Labs, it is as if two separate law clerks wrote the different sections and the judge never reconciled them,” Benjamin Cole, fellow at the British Blockchain Association and professor at Fordham University’s Gabelli School of Business, told TechCrunch+. “If this were an assignment turned in by a student, I would dock the grade repeatedly for internal inconsistencies and specious conclusions.”
“[The ruling] underscores the need for regulatory clarity and consistent standards across different types of participants and transactions,” said David Shargel, partner at Bracewell LLP. “The distinction will continue to fuel questions about the legalities and regulatory frameworks surrounding cryptocurrency sales and distribution.”
And it is, indeed, confusing: It’s a security in one context but not the other, which means it backs the SEC’s stance but also goes against it.