Crypto Regulation · Retrospective
In 2022, we argued that SEC v. Ripple Labs would "serve as a legal precedent for both the classification of digital assets and the future regulatory landscape of the entire crypto industry." That prediction proved accurate — though the precedent that emerged was considerably more nuanced, and considerably more favorable to the crypto industry, than most observers expected when the SEC filed its complaint in December 2020.
The case has concluded. XRP is not a security when sold on secondary markets to retail investors. Ripple paid $125 million in civil penalties — a fraction of the $1.38 billion initially sought. The SEC dropped its appeal under the new administration in January 2025. The legal cloud that had suppressed XRP's price and triggered delistings across U.S. exchanges for four years has fully lifted. And the ruling itself has reshaped how the entire industry thinks about token classification.
Judge Analisa Torres' July 2023 partial summary judgment was more surgical than sweeping. She did not rule that XRP was definitively not a security under all circumstances. She ruled that XRP sold programmatically on public exchanges to retail buyers who had no direct relationship with Ripple did not constitute an investment contract under the Howey test — because those buyers could not have reasonably expected profits from Ripple's entrepreneurial efforts when they purchased tokens without knowing Ripple was the counterparty.
Institutional sales — Ripple's direct contracts with hedge funds and market makers — were found to be unregistered securities offerings, because those buyers did have direct relationships with Ripple and were explicitly investing based on the company's promises. This distinction — between sales "into the market" and sales "to known investors" — has become the cornerstone of how lawyers now advise token issuers on regulatory compliance.
"A ruling in Ripple's favor would substantially reduce regulatory risk across the digital assets sector and provide the clarity the market has long sought." — Original 2022 Analysis. This is essentially what occurred, though with important qualifications about which sales constitute securities offerings.
Our 2022 analysis walked through the four Howey criteria in detail. The ruling clarified how each applies to secondary market token trading in ways that have become foundational to crypto legal practice:
| Howey Criterion | 2022 Question | 2026 Clarity |
|---|---|---|
| Investment of money | Does purchasing crypto count? | Yes — unambiguously established |
| Common enterprise | Is pooling into blockchain sufficient? | Horizontal commonality present in most token structures |
| Expectation of profits | Do buyers buy to profit? | Context-dependent: institutional buyers yes; retail secondary market — weaker case |
| Efforts of others | Is the issuer's work what drives value? | Key split: anonymous seller vs. issuer-as-promoter |
The Torres ruling introduced what practitioners now call the "anonymous market purchaser" doctrine — the idea that decentralized secondary market purchases lack the relational element that makes Howey's "efforts of others" prong meaningful. This is why Bitcoin and Ethereum have consistently been treated as commodities: no buyer purchasing BTC on Coinbase has any contractual or informational relationship with Satoshi Nakamoto or the Ethereum Foundation.
XRP was delisted or trading-suspended by Coinbase, Binance.US, Kraken, and most major U.S. exchanges immediately after the SEC filed in December 2020. Following the July 2023 ruling, relisting was rapid and comprehensive. XRP's price rose approximately 70% in the 24 hours following the decision. By early 2025, all major U.S. exchanges had restored full XRP trading, and WisdomTree, Bitwise, and 21Shares had filed spot XRP ETF applications — approvals that are expected in 2026 under the new SEC regime.
Ripple itself has moved aggressively to capitalize on its legal victory. The company's $1.25 billion acquisition of Hidden Road, a prime brokerage serving 300+ institutional clients, in early 2025 represents a dramatic pivot — from regulatory defendant to institutional financial infrastructure provider. The RLUSD stablecoin, approved by the New York Department of Financial Services and now in circulation with $500M+ in supply, extends Ripple's ambitions well beyond XRP itself.
The original article highlighted XRP's 4-second, $0.0002 settlement speed as a compelling technical advantage over SWIFT. This advantage has only deepened as On-Demand Liquidity (ODL) corridors have expanded to 30+ currency pairs. The USD/MXN, USD/PHP, and AUD/PHP corridors that were early ODL deployments have been joined by emerging market corridors including USD/INR and USD/BRL — among the world's highest-volume remittance routes. RippleNet now connects over 300 financial institutions across 45+ countries.
The ruling's industry impact extends well beyond XRP. Law firms advising token projects now structure offerings with explicit reference to the Torres decision: keep distribution anonymous and market-driven; avoid direct representations to buyers about profit expectations based on the team's work; document the decentralization of the network at the time of any secondary market trading. Coin Center and the Blockchain Association have both published post-Torres frameworks for token issuance that treat it as the de facto operative standard in the absence of comprehensive legislation.
The resolution of SEC v. Ripple has done exactly what the 2022 analysis predicted: reduced regulatory risk across the digital assets sector and provided frameworks for classification clarity. The investment implications that follow from the Torres standard are specific: token projects structured around decentralized secondary markets with no issuer-investor contractual relationships are in the strongest legal position. This describes Bitcoin and Ethereum most precisely — and increasingly describes the mature token ecosystems of Solana, Avalanche, and others where the original issuer's involvement is no longer the primary driver of network value. XRP specifically, with its spot ETF pipeline and Ripple's expanded institutional business, is positioned for a multi-year institutional adoption cycle that was categorically impossible while the SEC litigation hung overhead.