The SEC May Reclassify XRP As A Commodity

According to recent rumors, the SEC is considering reclassifying the XRP token as a commodity. The Commission is apparently comparing XRP to ETH, which was reclassified in the past.

Today, Vermont regulators cited the SEC’s new Crypto Task Force as a reason to drop its suit against Coinbase. In 2022, the state financial regulators argued that staking services violated securities laws, but it no longer holds this position. That swap could help establish a precedent for Ripple.

Ripple and the SEC Continue Deliberating

The SEC v Ripple case is a very hot issue in the crypto community, and for good reason. Under Gary Gensler, the Commission claimed that XRP was an unlicensed security and tried to block all sales.

Yesterday, rumors claimed that the case might be resolved soon and that Ripple is trying to negotiate far-reaching changes. A possible new angle has emerged:

“One issue that is being weighed by the Commission is whether XRP continues to trade and have a utility that makes it more a commodity, not a security. The Ethereum example is key; ETH was obviously issued as an ICO…no different from XRP, yet Ripple got sued and Ethereum didn’t because ETH had since morphed into a commodity,” claimed Charles Gasparino.

Such a proposal would be a significant change to US crypto regulations, but it’s plausible for several reasons. First of all, Commissioner Hester Peirce claimed that the SEC may stop considering some assets as securities, and it has already reclassified meme coins.

The Commission is also planning new collaborations with the CFTC, the US’ highest commodities regulator.

Already, the new post-Gensler SEC has laid some crucial groundwork for an XRP reclassification. If Ripple and the SEC can agree, XRP would be bound by much less severe regulations, which would almost certainly have a bullish impact on its market value.

XRP Has a Lot in Common with Ethereum

If the SEC drops its lawsuit against XRP, the altcoin can be evaluated primarily based on its decentralized functionality and utility within respective networks rather than as investment contracts—just like Ethereum was evaluated.

This shift would emphasize the role XRP plays in facilitating real-time transactions on its network, aligning its characteristics more with commodities.

Technically this would be easy to assess, as Ripple always provides payment infrastructure for several global banks and payment services.

Additionally, the SEC could point to other legal efforts to establish a precedent for the Ripple case. In 2022, Vermont and several other US states sued Coinbase, claiming that its staking services violated securities laws. Today, Coinbase’s Chief Legal Officer announced that Vermont dropped its charges, citing the SEC’s new paradigm:

“The SEC has announced the formation of a new task force to, among other things, provide guidance for the promulgation of rules regarding the regulation of cryptocurrency products and services. In light of the… likelihood of new federal regulatory guidance, the Division [will] rescind the pending Show Cause Order, without prejudice,” Vermont’s dismissal read.

In other words, one state already claimed that the Commission’s new guidelines have voided its old argument. If the SEC decides that it was previously too harsh to Ripple, it would be within its rights to reclassify XRP.

Ultimately, if XRP is classified as a commodity after April 16, it would immediately increase or even confirm the likelihood of XRP ETF approvals. Overall, such a scenario would be extremely bullish for the third-largest altcoin.