The U.S. Securities and Exchange Commission (SEC) has decided to drop its appeal in the Ripple case

After years of legal battles, the SEC's decision not to appeal the 2023 ruling by U.S. District Judge Analisa Torres brings clarity to the issue of whether XRP, the cryptocurrency issued by Ripple, is a security.

The U.S. Securities and Exchange Commission (SEC) has decided to drop its appeal in the Ripple case, a move that brings to a close a major legal battle that had implications for the cryptocurrency industry.

After years of legal disputes, the SEC will not be proceeding with an appeal against a 2023 ruling by U.S. District Judge Analisa Torres, which partially favored the SEC in its lawsuit against Ripple. The case revolved around the question of whether XRP, the cryptocurrency issued by Ripple, is a security.

Judge Torres's ruling stated that Ripple's "programmatic sales" of XRP via secondary exchanges, such as Coinbase and Kraken, did not violate securities laws. However, she found that Ripple's direct sales of XRP to institutional investors did constitute violations of securities regulations, leading to a $125 million fine imposed on Ripple.

Samson Enzer, a partner at Cahill Gordon & Reindel LLP, highlighted the significance of the Ripple case.

"This case is interesting because it stands in contrast to other cases that were dropped early on, such as the ones against Coinbase and Kraken, or the cases that were settled quickly, like the ones against blockchain companies in 2021," Enzer explained.

He noted that the cases against Coinbase and Kraken were dropped in the early stages, and the cases against blockchain companies were settled quickly. However, the Ripple case had progressed further, covering larger legal issues.

"This dismissal could have more impact since it sets a broader legal precedent," Enzer added.

With the legal battle now over, attention is turning to the possibility of an XRP exchange-traded fund (ETF). Multiple firms, including Grayscale, WisdomTree, and Bitwise, have applied for XRP ETFs, and there is growing optimism within the industry that the SEC will approve one soon.

Prediction platform Polymarket gives an 80% chance of an XRP ETF being approved this year, while Ripple CEO Brad Garlinghouse expressed confidence, stating that he believes the SEC will approve an XRP ETF in the second half of 2025.

Enzer believes that the shift in the SEC's approach to crypto could open the door for more crypto-related products, including ETFs. He explained that secondary market sales of cryptocurrencies like XRP are now considered commodities or property, meaning exchanges will not need to register to trade these assets.

"The fact that the SEC decided not to appeal Judge Torres's ruling is a huge development for the crypto industry," Enzer remarked. This brings to a close several years of litigation on the subject.

However, it's important to note that the SEC's stance on Ripple's direct sales of XRP to institutional investors still stands, and Ripple will retain $50 million of the $125 million fine imposed for these violations.

Moreover, there is still potential for state-level enforcement of crypto regulations, especially in cases that involve fraud or market manipulation.

The actions of the SEC under its new leadership suggest a shift toward more cooperation with the crypto industry, and some anticipate that the regulatory environment for digital assets will become more flexible. While there might still be instances of enforcement at the state level, Enzer noted that the federal government appears to be moving in a more positive direction for the crypto market.