Ripple's Position on Investment Contracts and Asset Classification

Ripple filed a 20-page comment letter on October 20, 2026, endorsing the SEC's draft regulation on digital assets. The company argues that an investment contract can qualify as a security without the underlying cryptocurrency itself being deemed a security. Instead, it advocates applying the Howey test to the specific investment arrangement, focusing on the issuer's commitments rather than broad decentralization metrics.

Under this framework, Ripple states that promises made to investors should determine the status of an investment contract. Once the issuer completes or permanently stops those essential managerial activities and makes no new commitments, the link to an investment contract ends. This approach, the firm contends, provides a more objective and predictable standard than subjective assessments of decentralization.

The letter also calls for exchanges and brokers to have reliable access to a proposed Form TR filing, which would document that an issuer has fulfilled its obligations. Ripple seeks consistent treatment of separated crypto assets across federal securities statutes, including clarifications on secondary-market transactions under Rule 500.

Financial and Operational Impacts of Past Litigation

Ripple's comments follow its extended legal dispute with the SEC over XRP sales, which the company says cost more than $150 million in legal fees. Alderoty has emphasized that such prolonged uncertainty forces businesses to navigate ambiguous interpretations rather than established law.

The firm points to broader industry data indicating a decline in US-based cryptocurrency developers from 38 percent in 2015 to 19 percent in 2024. It notes that its own US hiring doubled in 2024 compared with 2023, with most open roles based domestically by early 2025. These figures, Ripple argues, underscore the need for stable regulations to retain and attract talent and investment at home.

Proposed Exemptions and Safe Harbor Provisions

The SEC's Regulation Crypto Assets includes two registration exemptions aimed at qualifying issuers. One would allow eligible startups to raise up to $5 million over four years. A second pathway would permit offerings of up to $75 million within 12 months, subject to additional disclosure and financial reporting requirements.

Ripple supports these exemptions and the separate safe harbor provision for determining when a cryptocurrency is no longer associated with an investment contract. The company requests that the safe harbor be made more dependable for market participants such as exchanges and brokers, ensuring they can rely on properly filed forms without ongoing uncertainty.

Industry-Wide Advocacy for Codified Frameworks

Chainlink, Cardano, Hedera, Stellar, Aptos, and Avalanche submitted a joint letter urging the SEC to codify its existing digital commodity framework. Their representatives argue that such clarity would help keep American innovation at the forefront of digital asset development.

“Builders need lasting certainty. Codifying this progress would be a meaningful step toward keeping America the home of digital asset innovation,” said Taylor Barr, Chainlink's head of policy.

Separately, the Blockchain Association recommended increasing the proposed startup fundraising exemption from $5 million to $10 million. Ripple, for its part, is also seeking exemptions from full securities registration for certain crypto offerings.

Timeline and Next Steps in the Regulatory Process

The SEC introduced its proposed Regulation Crypto Assets in August 2026. The public comment period closed on October 20, yet the agency stated it would continue accepting submissions as it reviews industry feedback and considers revisions ahead of a final vote.

Ripple's filing represents one of the early and detailed responses, aligning with broader calls from other crypto projects for a stable legal environment that distinguishes between assets and contracts while providing practical pathways for compliance and market operations.