Ripple Labs has asked the SEC to finalize its proposed Regulation Crypto Assets framework. The company wants clearer rules on when an investment contract ends and how exchanges and dealers can operate. The SEC must now weigh industry feedback before it adopts or revises the rules.
Ripple Labs urged the US Securities and Exchange Commission to finalize its proposed Regulation Crypto Assets framework. The company argues that digital assets should not stay subject to securities laws indefinitely because of their original investment arrangements.
In an October 20 letter, Ripple backed the proposal but asked for more clarity on how investment contracts end, how crypto assets are classified, and how intermediaries can operate. The company also supports replacing enforcement actions against individual companies with rules that apply consistently across the industry.
Ripple says investment contracts can end
Ripple argued that an investment contract involving a cryptocurrency does not automatically make the underlying token a security. In its view, securities obligations should depend on the issuer's promises to investors and whether those obligations remain in effect.
The company said the framework should recognize that investment contracts can end once an issuer fulfills or permanently ceases the essential managerial activities it promised. Ripple also urged regulators not to rely on decentralization to decide whether a token remains subject to securities laws.
Under the proposal, crypto projects would have access to exemptions for offerings of up to $5 million over four years or $75 million during a 12 month period. The proposal also lets issuers certify that their tokens are no longer subject to an investment contract through a Form TR filing. Ripple supports that mechanism, but wants the SEC to clarify that skipping Form TR does not automatically leave a token under securities laws.
Ripple seeks protections for dealers and exchanges
Ripple also asked that exchanges, brokers, and dealers be allowed to rely on Form TR filings when making listing and trading decisions, rather than continuously monitoring an issuer's activities. In addition, it warned that the proposed rules could leave registered dealers subject to extra state securities requirements even when they provide ordinary market liquidity.
The company requested clarification that holding, lending, pledging, collateralizing, and staking should not independently trigger securities registration requirements.
The filing follows years of legal disputes between Ripple and the SEC over XRP sales. Chief Legal Officer Stuart Alderoty said the company spent more than $150 million seeking regulatory clarity.
The SEC introduced Regulation Crypto Assets in August, and the public comment period closed on October 20.
Source: Crypto Briefing
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