Even though Ripple has not yet launched its highly anticipated stablecoin, the U.S. SEC has already categorized the upcoming USD-backed token as an “unregistered crypto asset.”
The SEC made the classification in its reply to Ripple’s opposition to its opening remedies brief. Prominent XRP community figure WrathofKahneman (WOK) shared the development on X today.
Wow, the SEC is already taking shots at #Ripple's stablecoin proposal as a new "unregistered" crypto asset. It assumes it is an unregistered security. Feels like they're trying to sneak a little something extra in.. pic.twitter.com/yGT3InfzFc
— WrathofKahneman (@WKahneman) May 8, 2024
SEC Labels Ripple’s Stablecoin Unregistered Security
The SEC classified Ripple’s stablecoin as an “unregistered crypto asset” while shedding light on the company’s history of selling XRP as an unregistered security.
According to the SEC, Ripple has been involved in XRP’s unregistered sales since 2013. Moreover, it disclosed that the company is also planning to issue a stablecoin deemed an unregistered crypto asset.
Furthermore, the SEC pointed out that Judge Analisa Torres held that Ripple’s sales of XRP to institutional clients from 2013 to 2020 constituted investment contracts.
The regulatory agency added that Ripple did not dispute that all its post-complaint institutional sales violated the law.
The SEC’s claim elicited reactions among XRP community members, with WrathofKahneman saying:
“Feels like they’re trying to sneak a little something extra in.”
Ripple Unveils Plans to Launch a Stablecoin
In April, Ripple revealed plans to venture into the stablecoin market, a sector expected to surpass $2.8 trillion by 2028. Ripple intends to enter the market early, with plans underway debut a stablecoin on the XRP Ledger (XRPL) and Ethereum networks later this year.
The company said the forthcoming stablecoin would bridge the gap between traditional finance (TradFi) and the crypto sector. Despite Ripple’s claim, many believe the motive behind the stablecoin extends beyond fusing the worlds of crypto and TradFi.
In particular, pro-XRP lawyer Fred Rispoli asserted that Ripple intends to launch the stablecoin to cater to its United States-based ODL partners. This implies that ODL customers in the U.S. can leverage the stablecoin for cross-border settlements instead of XRP.
The SEC wants Judge Torres to impose a permanent injunction on Ripple’s future ODL-related XRP sales to prevent the company from further violating federal securities laws.
Should the judge grant this request, Ripple can still offer ODL services in the United States. However, U.S. clients would utilize Ripple’s forthcoming stablecoin instead of XRP for ODL transactions.
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