Ripple CLO calls for SEC to avoid overreach in crypto oversight

Key Takeaways

Ripple’s CLO asserts that the SEC’s regulatory authority is strictly limited to securities transactions.
A token itself is not a security, though it can be involved in a security transaction, according to the executive.

Ripple’s chief legal officer Stuart Alderoty expects the SEC to adopt a more legally sound approach to crypto regulation this year, with a focus on established legal principles rather than expanding its authority beyond its legal mandate.

In a Tuesday statement outlining key principles for securities regulation, Alderoty insisted the SEC’s authority be limited to securities transactions to prevent the regulator from overreaching its jurisdiction.

“Selling a gold bar with a contractual right, title, or interest in my gold mine? Likely a security transaction,” he explained, using gold trading as an example to illustrate the distinction between securities and asset sales. “Selling that same gold bar without post-sale rights or obligations? Just an asset sale—the SEC can’t police it.”

Alderoty also expects the SEC to avoid expanding its jurisdiction based on subjective interpretations of disclosure requirements, urging the regulator to stay within its legally defined boundaries.

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On the classification of digital tokens, Alderoty hopes the SEC will acknowledge that a token itself is not a security, though it can be involved in security transactions.

He also expects the SEC to abandon the notion of a token “evolving” from a security to a non-security—a “made-up fallacy with no legal basis,” he asserted.

SEC vs. Ripple lawsuit expected to conclude

With the incoming Trump administration and the nomination of Paul Atkins as the new SEC chair, there is widespread anticipation that the year-long legal battle between the US securities watchdog and Ripple will conclude at some point this year.

Given Atkins’ known pro-crypto stance, his influence could create a more favorable environment for Ripple, potentially leading to a quicker settlement or even SEC withdrawal of the case.

However, Alderoty stresses that the core issue—whether XRP is classified as a security—remains key. He suggests the Second Circuit Court’s review could affirm or even expand upon Judge Torres’ previous rulings, which have largely favored Ripple.

Analysts believe that if the SEC’s enforcement approach shifts or if the agency drops its appeal, XRP could experience a major price surge.