Internal SEC Emails Reveal Deeper Concerns About XRP's Fate If Ripple Exits

The SEC once considered consulting blockchain experts to assess XRP's fate if Ripple exited, raising questions about the network's decentralization and long-term resilience.

A deeper look into the U.S. Securities and Exchange Commission’s (SEC) internal concerns over Ripple’s flagship token XRP has revealed anxieties over the network's long-term resilience if the firm were to exit, rendering the fate of the widely traded asset uncertain.

This insight comes from internal agency emails obtained via a Freedom of Information Act (FOIA) request by Coinbase, offering a glimpse into the regulatory thinking that went into assessing the stability of crypto assets.

As Eleanor Terrett posted, a 2021 email from the SEC saw employees noting that they had worries that XRP would fold without the firm's backing, and there were discussions over how much that could be sustained on its own, especially in comparison to decentralized networks like Bitcoin.

This internal debate showcases how the regulators viewed the fact that the token was reliant on the firm as a weakness.

However, despite this, the agency went on to lose its case against Ripple, which saw it setting up a blockchain and crypto asset task force to examine the legal and technical structure of these assets and networks.

In a single email, SEC regulators even went on to warn of the demise of blockchain's future were Ripple to “walk away” or “vanish,” revealing rare behind-the-scenes concern over the structural independence of XRP.

At the time, the apex court was actively pursuing the firm over allegations that it had sold XRP as an unregistered security.

However, later that year, the apex court lost the case and was ordered to pay back some of the penalties that it had levied against the firm, rolling over some of the claims on Monday.

These latest disclosures are part of Coinbase’s wider campaign to disclose internal correspondence from the apex court as part of its own legal battle with the SEC.

The apex court had sued Coinbase and several other crypto exchanges earlier this year, alleging that they had sold unregistered securities and failed to register as an exchange.

The agency is also considering proposals for spot Bitcoin ETFs, where it had previously expressed concerns over the risks posed by crypto assets to investors.

These apex court actions and correspondence are stoking new attention on the apex court’s regulatory plans toward crypto assets, particularly those along the utility/security border like Ripple.