A U.S. judge recently declared that Ripple’s sales of XRP do not constitute an offer of investment contracts, which sent shockwaves through the cryptocurrency community. Discussions on whether popular cryptocurrencies like Ethereum (ETH), Cardano (ADA), and Polygon (MATIC) should potentially be classified as securities have been sparked by this unexpected development.
An important turning point in the continuing legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) was reached with the judge’s decision. Although the cryptocurrency token sold to the general public may not be categorised as a security, the judge held that institutional sales of XRP by Ripple were regarded securities. This crucial divergence made it possible for Ripple’s XRP and, consequently, maybe other cryptocurrencies, to avoid the classification of being securities.
A well-known cryptocurrency expert asserted that if XRP is not a security, neither are ETH, ADA, MATIC, and other cryptocurrencies after the decision. The analyst’s claim is an intuitive inference based on the most recent decision, not a legal conclusion. It is conceivable that other cryptocurrencies with comparable or less centralised systems may be judged the same if XRP, which has been under the SEC’s investigation for a time, can be classified as a nonsecurity for public sales.
The fact that decentralised networks are used by cryptocurrencies like Ethereum, Cardano, and Polygon sets them apart from conventional securities. These platforms’ distributed architecture makes it seem like their native tokens are more like commodities or currencies than securities.
It is important to keep in mind that these claims are now only speculative. Regulating bodies and the adopted legislative framework will eventually decide whether cryptocurrencies are classified as securities or nonsecurities.
