Ripple XRP Sales Face Possible Ban in the U.S.
Ripple is facing the looming threat of a permanent ban on XRP sales to institutional clients in the United States as part of its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC).
To provide some context, the SEC vs. Ripple lawsuit revolves around Ripple’s unregistered XRP sales, which raised over $1.3 billion. A recent ruling has presented a nuanced view, stating that for institutional sales, XRP is considered a security and must comply with U.S. securities laws. However, the court ruled that programmatic sales of XRP to retail investors through exchanges are not securities, marking a partial victory for Ripple and the broader crypto market.
Ripple is making preparations for the worst-case scenario, including the potential permanent injunction on XRP sales to U.S. institutional clients. Attorney Bill Morgan clarifies that Ripple’s strategy involves continuing sales through its foreign subsidiaries, which operate under different regulatory regimes. This allows Ripple to maintain its international business operations and offer its services and sell XRP outside the United States.
The Financial Innovation and Technology for the 21st Century Act (FIT21) has sparked debates among XRP holders. This bill, passed by the U.S. House, aims to establish clear regulatory guidelines for cryptocurrencies. However, Morgan explains that the legislation is not retrospective and will not change the status of XRP. The court has already determined that XRP itself is not a security, and the SEC will not dispute this finding.
As part of its preparations for a worst-case scenario, Ripple plans to sell XRP to overseas customers through subsidiaries operating under different licensing regimes to ensure compliance with local regulations.
Despite the challenges posed by the ongoing legal battle with the SEC, Ripple’s strategies and preparations demonstrate its ability to adapt. By focusing on international markets and complying with various regulatory environments, Ripple aims to maintain its operations and market presence.