XRP Included in SEC and CFTC Digital Asset Classification, But Trading Methods Remain Key

Ripple (XRP) has been included in the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) interpretation of digital assets, though legal judgments vary by transaction type. A 2023 court ruling also differentiated between the asset itself and its sales method.

Stuart Alderoty, Ripple's Chief Legal Officer, stated on March 16 that 'Ripple and XRP are built on established foundations' and that a 2023 federal court ruling confirmed XRP is not a security. This comment followed the U.S. Senate's failure to advance the CLARITY Act for virtual asset market structure discussions.

The New York Southern District Court ruled in 2023 that Ripple's XRP sales should be assessed by transaction type: institutional sales were considered investment contracts, while exchange-based program sales and certain other distributions did not receive the same conclusion. The court evaluated assets based on sales method, counterparty, and market context rather than categorizing XRP as a whole.

On March 17, both SEC and CFTC issued interpretations applying federal securities law to specific virtual assets and enforcing commodity trading laws accordingly, effective March 23. The SEC listed Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Solana (SOL) as examples of digital commodities. The CFTC described digital commodities as assets whose value is tied to the operation of a virtual asset system and market supply-demand dynamics.

However, not all virtual assets automatically qualify as digital commodities; individual transaction structures require separate assessment. Alderoty noted that SEC and CFTC's March 17 classification of XRP as a digital commodity 'sets a clear foundation,' with future rules expected to clarify market operations. Specific rule release dates were not provided.

The Senate failed to advance the CLARITY Act on March 15, with a vote of 49-50 against proceeding to full debate. This did not change previous court rulings or SEC/CFTC interpretations but delayed legislative progress. The CLARITY Act aims to clarify whether digital assets are securities or commodities under SEC and CFTC jurisdiction.

Ripple stated the Senate's failure does not alter XRP's existing legal status, maintaining that both court rulings and regulatory interpretations leave room for distinction between institutional sales and exchange transactions. Market reactions followed: Bitcoin.com reported a 10% drop in XRP price to $1.29 post-vote, while Investing.com noted an 9.81% decline to $1.2757 on March 16.