Ripple proposes a token maturity test for clear SEC regulations.
Keeping issuer commitments should make tokens not securities.
Network maturity, not decentralization, should guide crypto regulation.

Ripple recently sent a letter to the SEC’s Crypto Task Force, suggesting a way to decide when digital assets are no longer considered securities. The proposal answers a major point raised by Commissioner Hester Peirce in her “New Paradigm” speech concerning when a token is no longer seen as an investment contract. The framework is meant to help clarify the rules around cryptocurrencies such as XRP.

Ripple’s Token Maturity Framework

The company proposes an easy rule to help decide if a token is no longer a security. If the promises from the issuer are all met and token holders have no way to sue the issuer, the token should not be classified as a security. Ripple says this method stays true to existing laws and promotes innovation in the crypto sector.

The proposal refuses to accept vague SEC terms such as “sufficient decentralization” and “fully functional.” The study focuses on measurable factors including network status, value, and governance. It is Ripple’s stance that tokens on strong, maintained, well-valued networks that are not controlled centrally should not be regulated as securities.

The document brings up SEC v. Judge Analisa Torres, declaring XRP is not a security in the Ripple ruling. However, the SEC found that some early institutional sales were investment contracts, which cost the company a $125 million penalty. Ripple wants to avoid similar regulatory confusion from happening again in the future.

The corporation also supports a safe harbor law for legitimate crypto projects expanding. Because of this rule, projects would not have to deal with securities law at the start, which can encourage new ideas without compromising compliance.

Push for Congressional Oversight

Ripple believes that the SEC’s present rules make things unclear and prevent new ideas from being developed. A clear set of standards for digital assets should be established by Congress, not the Securities and Exchange Commission, according to the letter. It mentions that when regulators impose their rules on a wide scale, it brings confusion and makes it less likely for legitimate projects to happen.

The token maturity test under consideration requires 10 years of network operation, a market capitalization of over $1 billion, and no domination by only one person. According to Ripple, assets that fit the description are now included in worldwide financial systems, trade in liquid markets, and support regulated items such as ETFs.

The letter praises the SEC’s Crypto Task Force for its May 20, 2025, meeting and welcomes more conversation. On social media, Stuart Alderoty, the Chief Legal Officer of Ripple, urged for better regulation to support XRP and similar tokens.

The Ripple proposal is being made as legal battles over crypto continue. Ripple and the SEC settled on a $50 million deal in April 2025, which was less than the first $125 million fine. A federal court turned down a joint request for an indicative decision on May 15, 2025, because of various issues with the process. Both sides want to file another motion to approve the settlement.

Wider industry needs are reflected in the call for clear regulations. Coinbase has also urged the SEC to update its rules to help the crypto industry grow, Coinbase Blog. In a similar way, the Blockchain Association supports making the laws clearer to help the U.S. stay competitive in cryptocurrency.

Impact on XRP and Crypto Markets

Ripple’s plan might have a big impact on how the SEC oversees digital asset transactions. By looking at token maturity, the framework helps tokens leave securities classification which could attract more users to XRP. Because the 2023 ruling made it clear XRP is not a security in secondary markets, its price has climbed by 370% since November 2024.

The cryptocurrency market is still vulnerable to sudden price swings. At the time, Ripple was trading at $2.44, down from its highest price in the past year, a result of the overall market drop. A meeting behind closed doors by the SEC on May 29, 2025, could lead to renewed settlement discussions and affect XRP’s price and chances for an ETF.

Ripple points out that having a stable set of rules is necessary for the industry. The company believes that XRP, which runs on networks that are not controlled and is used in large markets, should not be subject to securities law. This is consistent with the industry’s request for regulations that defend investors while letting growth happen.

The result of the proposal is still uncertain. If it is adopted, the token maturity test could act as a model for other cryptocurrencies, helping to clarify the rules for the industry. 

The post Ripple Challenges SEC with New Crypto Classification Framework appeared first on Live Bitcoin News.

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Filed under: Bitcoin - @ May 28, 2025 7:17 pm