SEC’s New Crypto Framework Could Give Ripple a Legal Exit for XRP — But There’s a Catch
The SEC’s proposed Regulation Crypto Assets framework, announced August 18, includes a safe harbor that could let Ripple formally distance itself from XRP’s investment-contract classification — but legal analysts caution the new fundraising exemptions are too small to matter for the company.
The proposal, which enters a 60-day public comment period, would allow certain crypto offerings up to $75 million annually without SEC registration, alongside a conditional safe harbor for tokens once an issuer’s “essential managerial efforts” have ended. SEC Chairman Paul Atkins said the framework aims to provide “clear pathways to raise capital under the federal securities laws.”
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Why the Dollar Thresholds Don’t Help Ripple
Attorney Bill Morgan, who has tracked the Ripple case closely, said the new exemptions are effectively useless for Ripple. The company releases roughly $300 million worth of XRP from escrow each month — a figure that alone dwarfs the $75 million annual threshold.
Morgan also noted Ripple already secured a “bad actor waiver” from the SEC last year, which allows the company to use the existing Rule 506 exemption for private offerings to institutional investors. That means the new exemptions add little for a firm already operating under an established compliance path.
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The Safe Harbor Is the Real Prize
Where Morgan sees genuine relevance is in the proposal’s safe harbor provision, sometimes called Rule 400. To qualify, Ripple would need to certify that its managerial efforts tied to XRP have permanently ceased — a step that would remove the investment contract classification a court applied to some of Ripple’s institutional sales in 2023.
Morgan argues XRP has a plausible path to qualify. He points to Ripple’s expanding focus on its RLUSD stablecoin and a series of acquisitions over the past 18 months as evidence the company’s core activity has shifted away from XRP-specific development.
“Most of what Ripple does today falls into the category the SEC currently treats as non-essential, post-functionality activity,” Morgan wrote on X, adding that Ripple has stayed notably quiet on new promises tied to XRP itself.
What’s Next for Ripple and XRP
The open question isn’t whether XRP counts as a commodity going forward — the SEC and CFTC jointly classified XRP, BTC, ADA, and SOL as commodities in March 2026. The real test is whether Ripple can formally close the door on its past institutional sales being treated as investment contracts.
That would require the safe harbor to survive the comment period intact, and Ripple to make a certification that could have lasting legal consequences. If successful, it would effectively end the securities-law overhang that has followed XRP since the SEC filed its lawsuit in December 2020.
The SEC’s proposal is open for public comment for 60 days, and changes are possible before final adoption. Market participants and legal observers will be watching whether the safe harbor language tightens or expands — and whether Ripple moves to use it.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency markets are volatile and uncertain; readers should conduct their own research before making investment decisions.
