SEC Classifies Ripple's Stablecoin as Unregistered Crypto Asset

The U.S. Securities and Exchange Commission (SEC) has deemed Ripple Labs' upcoming stablecoin an "unregistered crypto asset," according to a recent court filing. The SEC maintains that Ripple has been selling XRP as an unregistered security since 2013 and plans to release another unregistered security in the form of a new token.

U.S. Securities and Exchange Commission Classifies Ripple Lab's Planned Stablecoin as Unregistered Crypto Asset

Washington, D.C. - The U.S. Securities and Exchange Commission (SEC) has declared Ripple Lab's proposed new stablecoin an "unregistered crypto asset." This designation stems from the SEC's ongoing legal battle with Ripple, which alleges that the company has been illegally selling XRP, the digital asset used to operate the XRP Ledger, as an unregistered security since 2013.

In a recent court filing, the SEC articulated that Ripple's core business operations have consistently revolved around the unregistered sale of XRP. Furthermore, the agency asserted that Ripple intends to introduce a new token that would also constitute an unregistered security.

"Ripple's primary business continues to be, as it has been since 2013, unregistered sales of XRP. It also plans to issue a new unregistered crypto asset," stated the SEC filing. "And the Court already found that Ripple's ODL (on-demand liquidity) institutional sales up to 2020 violate the law..."

The SEC emphasized that under applicable law, even if Ripple had not committed any further violations since 2020, the potential for future transgressions remains a significant concern.

Last month, Ripple announced its plans to launch a new stablecoin on both the Ethereum (ETH) and XRP ledgers. The company explained that this dollar-pegged digital asset, yet to be named, would be fully backed by cash, short-term U.S. government treasuries, and other cash equivalents.

Ripple also indicated that the stablecoin would eventually be integrated into other blockchains but did not specify which ones.

The SEC's lawsuit against Ripple originated in 2020, alleging the sale of XRP as an unregistered security. In a partial victory for Ripple last year, a judge ruled that the firm's open-market sales of XRP did not constitute security offerings, as claimed by the SEC. However, the judge concurred with the SEC's assertion that Ripple's XRP sales to institutional buyers qualified as security offerings.

At the time of writing, XRP is valued at $0.527, representing a decline of 2.34% in the preceding 24 hours.

The SEC's classification of Ripple's planned stablecoin as an unregistered crypto asset has significant implications for the company and the broader cryptocurrency industry. It underscores the SEC's ongoing scrutiny of digital assets and its determination to enforce securities laws within the crypto sphere.