tl;dr
The SEC granted Ripple a waiver allowing it to sell securities to private investors, contradicting Judge Torres’ rulings in the XRP case. This exemption removes a previous ban on Ripple’s securities sales, potentially opening a new revenue stream despite unresolved fines and violations. Legal expert...
In a rather surprising development, the SEC issued a waiver allowing Ripple to sell securities to private investors, directly contravening Judge Torres’ rulings in the XRP case’s lengthy cross-appeals process. Legal experts appeared dumbfounded by the move but acknowledged there isn’t a clear way to stop it. Ripple is likely to gain a new revenue stream, though this decision could potentially undermine the legal system altogether.
Over recent months, Ripple and the SEC have been engaged in the appeals process of their landmark legal battle. Both parties dropped the case in March but cooperated to try to remove a restriction imposed during the Gensler era that prevented Ripple from selling securities to retail investors. While this effort failed through traditional legal channels, the SEC issued a waiver last Friday granting Ripple an exemption from the disqualification provision, effectively allowing the firm to bypass the securities sales ban.
The SEC’s waiver essentially grants Ripple its most significant request from the cross-appeal: relief from the securities sales restriction. While Ripple’s fines remain unpaid and violations intact on its legal record, this new exemption opens the door for revenue-generating sales that were previously prohibited.
Marc Fagel, a former SEC official and litigator familiar with the Ripple case, described the waiver as “unprecedented and arguably dubious,” even “arguably lawless.” He pointed out that the presiding judge had explicitly denied Ripple’s request multiple times, viewing the waiver as a direct affront to the court. Nevertheless, Fagel emphasized the practical reality that no clear mechanism exists to block or repeal the waiver, noting that any legal challenge would be unlikely unless XRP investors suffer losses and demand accountability.
This waiver breaks new ground in cryptocurrency regulation. With this official exemption, Ripple can argue the legality of its securities sales robustly. In the short term, the SEC has provided Ripple with a valuable new revenue stream that could fuel ambitious growth strategies. XRP supporters have much to look forward to, barring any unforeseen legal challenges.
However, this move escalates tensions within crypto regulation. The SEC already faces criticism for perceived favoritism toward the crypto industry, and this action pushes that narrative further. In the long term, the waiver may weaken federal government safeguards designed to control crypto markets, raising significant questions about the future interplay between regulators and cryptocurrency firms.