Despite Ruling That XRP Itself Is Not a Security, Most Digital Assets Are Not Securities

Senator Cynthia Lummis, a known advocate for cryptocurrency legislation, recently stated on X that most digital assets are not securities under the Howey test.

Senator Cynthia Lummis has sparked discussion on X about the status of digital assets as securities, drawing a response from attorney Bill Morgan.

Senator Cynthia Lummis, a Republican from Wyoming and a known advocate for cryptocurrency legislation, stated on X that "most" digital assets are not securities under the Howey test.

Her comments follow a congressional hearing on digital assets, where lawmakers touched upon the U.S.’s slow progress in establishing clear guidelines for the crypto industry, contrasting with the EU’s swift integration of crypto through MiCA.

Lummis also highlighted the role of stablecoins in modernizing payments.

However, her assertion that most cryptocurrencies are not securities has raised questions about the SEC’s approach to enforcement, particularly in its case against Ripple.

The Interoperability Initiative and Judge Torres’ Ruling

Lummis’s statement comes amid efforts to promote interoperability between U.S. and foreign legal frameworks for crypto.

Earlier this year, a bipartisan group of senators, including Lummis and Democrat Tim Kapoli, introduced the Interoperability, Inclusion, and Innovation Centered (I3) Framework.

The initiative aims to streamline cooperation with trading partners in the digital asset space.

Lummis’s comments also follow Judge Analisa Torres’s ruling in July 2023 that XRP itself is not a security.

Morgan Asks Lummis About Judge Torres’ Ruling

In response to Lummis’s statement, attorney Bill Morgan, known for his work in the SEC v. Ripple case, asked if the senator agrees with Judge Torres’s ruling.

“Does Senator Lummis agree with Judge Torres’s ruling that XRP is not a security in the SEC v. Ripple case?”

This question directly challenges the SEC’s claims that most cryptocurrencies are securities.

The judge’s ruling, which found that certain institutional sales by Ripple violated securities laws, has since been appealed by the SEC.

The agency is pushing for a broader interpretation of Section 77b(a)(1) of the Securities Act of 1933 to include all digital assets sold to raise capital.

This suggests that Lummis’s statement and Judge Torres’s ruling are part of a broader debate over the role of the SEC in the digital asset industry.

Lawmakers Push for Legislation to Define Legal Status

The U.S. remains behind other countries in crypto regulation, with the EU forging ahead in implementing clear frameworks through initiatives such as MiCA.

This lack of clear legislation has led to a regulatory gray zone, affecting crypto firms and stifling innovation.

Lawmakers, including Lummis, have repeatedly pushed for Congress to pass legislation to define the legal status of digital assets.

Lummis’s comments suggest support for a more streamlined approach to crypto regulation.

This contrasts with the SEC’s actions under former chair Gary Gensler, which stated that many cryptocurrencies qualify as securities, leading to enforcement actions against several firms.

This approach has sparked criticism for being overly broad and hindering crypto adoption.

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