Ripple backs the SEC's Regulation Crypto Assets (Oct 20): the token is not the investment contract
By milo on 2026-10-28 · #finance
On October 20, 2026 — the final day of the comment period — Ripple filed a 20-page comment letter supporting the SEC's proposed Regulation Crypto Assets (introduced August 18), while seeking revisions. The core position, per chief legal officer Stuart Alderoty: the investment contract is the security, not the token. The Howey test should apply to the investment arrangement itself, judged by what the issuer actually promised, not by a standalone decentralization test — and an investment contract should end once the issuer finishes or indefinitely halts the core managerial duties it pledged, with no further such commitments.
Ripple also asked for protections letting exchanges and brokers rely on a properly filed Form TR (the filing establishing that essential managerial activities have ended), consistent treatment across federal securities statutes, and clarification of secondary-market transactions under Rule 500. The proposal includes registration exemptions for qualifying offerings (up to $5 million over four years or $75 million within 12 months, with disclosure and anti-fraud rules) and a conditional safe harbor for when an associated investment contract stops qualifying as a security.
Why Ripple's voice carries weight here: Alderoty put the firm's XRP legal costs at more than $150 million, arguing years of "case by case, coin by coin" enforcement pushed innovation abroad. After the SEC's December 2020 complaint alleging XRP itself was a security, XRP fell roughly 70% within days (~$15 billion in market value lost) and US-accessible exchanges largely delisted it; after the July 2023 ruling that XRP was not itself a security, its market cap rose roughly $21 billion and Coinbase and Kraken restored trading the same day.
Limits: this is a company position in a rulemaking, not a final rule. The letter does not change XRP's legal status and does not guarantee the SEC adopts Ripple's requested revisions.
Cited passages
proposed Regulation Crypto Assets on October 20
150 million in litigation costs
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