TLDR
- Ripple argues for clear boundaries between SEC and CFTC on crypto regulation.
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Ripple urges exclusion of well-established tokens like XRP from SEC oversight.
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Ripple proposes that tokens on open networks for 5+ years should avoid securities regulation.
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Ripple calls for Congress to define Howey test criteria for digital assets, not the SEC.
Ripple has expressed concerns regarding the draft legislation for crypto market structure, arguing that it could result in expanded and unchecked authority for the U.S. Securities and Exchange Commission (SEC) over digital assets. In an August 5 letter to Tim Scott, Chairman of the Senate Banking Committee, Ripple’s Chief Legal Officer, Stuart Alderoty, highlighted that the bill does not provide the clarity the industry needs, especially regarding SEC jurisdiction and the classification of tokens like XRP.
Ripple warned that the draft could lead to long-term regulatory uncertainty for the crypto market, which would hurt consumers and market participants. The company argued that the definition of “ancillary asset” in the bill risks significant overreach by the SEC, potentially placing perpetual oversight over digital assets that do not meet the characteristics of securities.
Ripple Call for Clear Jurisdictional Boundaries
Ripple emphasized the need for Congress to provide clear rules on jurisdiction, particularly in distinguishing the roles of the SEC and the Commodity Futures Trading Commission (CFTC). The company noted that while the bill attempts to separate the two agencies’ authority, it ultimately creates more confusion and potential for overregulation.
Ripple’s letter pointed out that the current draft might subject tokens like ETH, SOL, and XRP to SEC oversight indefinitely, even if they no longer meet the legal definition of a security. This concern stems from the proposed concept of “ancillary assets,” which Ripple believes could allow the SEC to extend its power over tokens in a manner that would lead to legal and market instability.
Thank you to @BankingGOP for the opportunity to respond to your Request For Information. With over a decade of experience working with regulators all over the world—and hard-earned lessons from our SEC fight—Ripple welcomes the chance to offer our unique perspective as Congress…
— Stuart Alderoty (@s_alderoty) August 5, 2025
The company recommended that Congress should establish clear criteria for classifying digital assets as securities, referencing the approach in the CLARITY Act. Ripple urged that these criteria should consider the decentralized nature of mature networks, which are not controlled by a central authority.
Ripple’s Concerns About Perpetual SEC Oversight
Ripple also raised concerns about the idea of placing long-established digital assets under permanent SEC oversight.
The company argued that tokens like XRP, which have been in circulation for several years and are traded on permissionless networks, should not be continuously regulated by the SEC if they no longer exhibit the characteristics of securities.
In the letter, Ripple proposed that tokens which have been traded freely for more than five years on open, permissionless networks should be presumptively excluded from securities regulation. This exclusion would apply to assets that do not have a centralized entity behind them, in line with the decentralized nature of blockchain technology.
Need for Legislative Clarity and Avoiding Over-Regulation
Ripple further stressed the importance of Congress crafting legislation that provides long-term clarity rather than leaving these decisions up to the SEC. The company expressed concerns that future SEC leadership could apply rules inconsistently, potentially leading to unpredictable enforcement actions.
Ripple also emphasized the necessity of preventing any “regulation by enforcement” approach in the future. The company referenced its ongoing litigation with the SEC as a reason why it is particularly cautious about the regulatory environment. Ripple urged that any future regulations should not be vague or open-ended, which could lead to arbitrary interpretations.
Finally, Ripple suggested that federal legislation should preempt certain state laws to create a more consistent regulatory framework across the U.S. This would help avoid a fragmented approach that could hinder innovation and investment in the digital asset market.
