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In July 2023, a ruling by Federal Judge Analisa Torres in the Southern District of New York pushed Ripple Labs' three-year legal standoff with the U.S. Securities and Exchange Commission (SEC) to a climax. This case, known as a milestone ruling in the cryptocurrency industry, not only concerns the fate of the <a href="/ja/price/xrp-xrp" target="_blank" class="blog_inner_link">XRP</a> token but may also set the tone for the regulatory framework of the entire digital asset market.

## Core issue: Whether XRP is considered a security?

SEC initiated a lawsuit in December 2020, accusing Ripple of illegally raising $1.3 billion through the sale of XRP tokens, in violation of securities laws. The core basis is the "Howey Test," which determines whether an asset constitutes an "investment contract." The SEC believes that investors [Buy XRP](/crypto/buy/xrp-xrp) The essence is to invest in Ripple company and expect to profit from managing the token ecosystem.

Ripple insists that XRP is a payment tool rather than a security, emphasizing its decentralized nature: the XRP ledger has been running since 2012, with 80% of tokens distributed through algorithms, and the company cannot control the Ripple network. This defense strategy achieved partial success on July 13, 2023: the judge ruled that programmatic sales on exchanges do not constitute securities, but direct sales to institutional investors are in violation.

On the day of the ruling, [XRP price](/price/xrp-xrp) Soared 75%. The deeper impact is the shake-up of regulatory logic:

1. Setting a precedent for layered identification: for the first time distinguishing token sale scenarios and acknowledging that secondary market trading may not constitute securities activities.
2. Exchange responsibility redefined: Exemption for programmatic sales reduces the compliance pressure on trading platforms.
3. SEC authority frustrated: The regulatory agency's previous lawsuits against some centralized exchanges were all based on a single determination of 'tokens as securities', a ruling that weakened its legal basis.

Once the ruling was announced, the crypto industry responded quickly, with Grayscale immediately applying for an XRP spot ETF, and Ripple CEO Brad Garlinghouse revealing the possibility of launching an IPO. However, the SEC filed an interim appeal in August of the same year, attempting to prevent the ruling from becoming a precedent, demonstrating the regulatory attention to this case.

## The deep game behind the legal battle

The essence of the case is the collision between emerging technologies and traditional regulatory frameworks. The SEC's use of the 1946 Howey Test to regulate crypto assets has been criticized as 'trying to fit a square peg in a round hole.' Ripple's Chief Legal Officer Stuart Alderotti pointed out: 'The SEC is trying to reshape the industry through enforcement rather than legislation, which goes against the rule of law.'

Data shows that the SEC launched more than 50 encryption lawsuits between 2021 and 2023, but over 60% of the defendants chose to settle. Ripple's tough defense strategy has objectively won some breathing room for the industry. Jake Chervinsky, Chief Policy Officer of the Blockchain Association, believes: 'This case may force Congress to accelerate the enactment of specialized encryption regulations.'

## Future Outlook of XRP

The XRP case reveals a fundamental contradiction: the global liquidity of blockchain conflicts with localized regulation. With Trump's election as president, more regulatory policies on crypto assets may be forthcoming.

Regardless of the outcome, the confrontation between Ripple and the SEC proves that regulatory agencies cannot simply categorize and solve problems in the face of technological innovation. Establishing a dynamic, layered regulatory framework that balances investor protection and industry development is the key to the digital age. The endgame of this game may determine the direction of global cryptocurrency evolution in the next decade.

<div class="blog-details-info">
<div>Author: **Icing**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions. Investment involves risks and users need to make careful decisions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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The Tug-of-War Between XRP and SEC: A Game Reshaping the Regulatory Landscape of Cryptocurrency