What Does the SEC's Move Mean for XRP?

The SEC's decision to update its website by listing the Ripple lawsuit under the "appeals" section is not necessarily a signal of the case's resolution

The U.S. Securities and Exchange Commission (SEC) has updated its website to include the ongoing lawsuit against Ripple Labs in the “cases on appeal” section, sparking fresh speculation about the future of XRP.

The SEC filed a lawsuit against Ripple in December 2020, alleging that the company raised over $1.3 billion through an unregistered digital asset securities offering. Ripple has maintained that XRP is a digital asset and not a security.

Now, with the case still in appellate court, what does this change on the SEC website mean for XRP and the broader landscape of cryptocurrency regulation in the U.S.? Let’s dive into the latest updates and explore the potential implications.

SEC Updates Website, Moving Ripple Lawsuit to ‘Cases on Appeal’

On February 1, 2025, a subtle yet significant change occurred on the U.S. Securities and Exchange Commission (SEC) website. The page, which provides an overview of the SEC’s ongoing legal cases, has now listed the case against Ripple Labs Inc. in the “cases on appeal” section.

This update signals that the SEC’s case against Ripple, which began in December 2020, has now progressed to the appellate court level. Following the District Court’s summary judgment decision in December 2022, both parties filed their respective appeals in early January 2023.

As the case continues to unfold in the Second Circuit Court of Appeals, both the SEC and Ripple are presenting their arguments and awaiting the court’s decision. The appellate court will review the lower court's decision and determine whether any legal errors were made during the proceedings.

After hearing oral arguments in September 2023, the Second Circuit is expected to issue its ruling in the first half of 2025. This decision will either fully resolve the case or remand it back to the District Court for further proceedings.

Breaking Down the Legal Battle: XRP Use Case at the Forefront

The SEC alleges that Ripple raised over $1.3 billion through an unregistered digital asset securities offering from 2013 to 2019. According to the complaint, about 14.6 billion XRP tokens were sold directly by Ripple, while another 52 billion XRP were sold through third parties, mainly cryptocurrency exchanges.

However, Ripple has maintained throughout the case that XRP is a digital asset and not a security. The company argues that the SEC’s case is based on an overreach of federal securities laws and that its use case—particularly in Ripple’s On-Demand Liquidity (ODL) service—renders XRP fundamentally different from traditional investment contracts.

Moreover, Ripple has highlighted the critical role of XRP in facilitating faster and lower-cost cross-border payments through ODL. This service, which leverages XRP as a bridge currency, has already processed billions of dollars in transactions daily, according to Ripple.

If Ripple emerges victorious in this legal saga, it could set a pivotal precedent for the future of crypto regulation in the United States. A favorable ruling might limit the SEC’s ability to pursue similar actions against other digital assets, especially those with clear use cases in the real world.

On the other hand, a ruling against Ripple would strengthen the SEC’s authority in regulating cryptocurrencies and digital asset markets. The Commission could ramp up its efforts to classify and regulate various digital assets based on their specific characteristics and use cases.

Either way, the outcome of this case is bound to have a far-reaching impact on the cryptocurrency industry and the broader financial landscape in the U.S. As we continue to follow the legal proceedings and await the appellate court’s decision, stay tuned for further updates on this critical development.