Ripple is making a bold move in its ongoing legal battle against the U.S. Securities and Exchange Commission (SEC). Instead of accepting the SEC’s reduced penalty demand, Ripple has filed a Notice of Supplemental Authority, challenging the SEC’s regulatory approach. The company argues that the SEC’s method of regulating through court cases lacks clarity and risks inconsistent results.
In the notice, Ripple emphasizes that digital assets like XRP do not neatly fit into the existing framework established by the Howey test, which determines what qualifies as a security. Ripple criticizes the SEC’s reliance on court cases to shape industry regulations, asserting that this approach does not provide clear guidance to market participants.
The SEC is expected to respond to Ripple’s filing and may point to the SEC vs. Terraform Labs ruling, in which it was determined that Terraform Labs and its founder violated securities laws. This ruling and its implications may be referenced to counter Ripple’s arguments.
The outcome of this legal battle is anticipated to have a significant impact on the price of XRP and the broader cryptocurrency market. A favorable ruling for Ripple could lead to an XRP rally, similar to the market response following Ripple’s partial victory last year. Conversely, a win for the SEC could result in a downturn in the crypto market.
As of now, XRP’s price has experienced a slight increase of 0.5%, trading at $0.4792 with a market capitalization of $26.68 billion. However, it remains below its recent high of $0.52, which was influenced by speculation surrounding the potential approval of an Ethereum ETF.