Ripple Labs Inc.’s ongoing legal battle with the U.S. Securities and Exchange Commission (SEC) appears to be nearing a conclusion as settlement talks are already in progress, as previously reported by ETHNews.
A central issue in the discussions is whether XRP will be classified as a commodity, similar to Ethereum (ETH). A potential shift in classification could greatly change XRP’s legal status and market dynamics.
Ripple SEC Lawsuit Nears Resolution
The SEC filed its lawsuit against Ripple Labs in December 2020, alleging that the company conducted an unregistered securities offering by selling XRP tokens.
Ripple has argued that XRP should not be treated as a security, pointing to Ethereum’s similar early-stage fundraising model. Ethereum was classified as a commodity after raising funds to build its platform—this is the precedent that Ripple has continuously cited in its defense.
Fox Business Senior Correspondent Charles Gasparino recently reported on X that the SEC is considering whether XRP should be classified as a commodity rather than a security. Gasparino suggested that XRP’s initial coin offering (ICO) is closely similar to that of Ethereum’s early fundraising model.
Ripple Labs Chief Technology Officer David Schwartz has stated the differences between XRP and ETH.
He noted that Ethereum was privately sold by an issuer before the existence of a blockchain or ledger, whereas XRP had an established network and usage since its launch.
Despite these differences, the SEC’s potential reclassification of XRP as a commodity could mark a major step in how digital assets are regulated.
Implications for XRP and the Broader Market
If XRP is classified as a commodity, it would remove the token from the scope of certain securities regulations, which could lead to increased institutional adoption and regulatory clarity.
A favorable outcome for Ripple could also open the door for XRP-backed exchange-traded funds (ETFs) in the United States.
Bloomberg Senior ETF Analysts Eric Balchunas and James Seyffart have estimated a 60% chance of an XRP ETF approval if the lawsuit ends in Ripple’s favor.
An establishment of XRP’s ETF would position it alongside the likes of Bitcoin and Ethereum, which have already seen successful ETF launches.
A positive outcome for Ripple could also push the SEC to revisit its approach to other cryptocurrencies.
Community sentiment around the case has been largely positive. XRP holders and market participants are optimistic that a settlement will increase liquidity and institutional inflows into XRP. Market analysts have predicted that a formal settlement announcement could trigger a price surge for XRP.
A resolution to the Ripple lawsuit could reshape the regulatory landscape for cryptocurrency. If XRP is classified as a commodity, it would strengthen Ripple’s market position and provide a better framework for future legal battles over digital asset classification.
