The court's July 13 decision that XRP is not a security marks a landmark ruling, not just for Ripple but for the entire crypto industry. This is because it sets the precedent for other crypto assets and securities regulation in the U.S. and was the first industry win over the SEC.
According to Ripple, the SEC's lawsuit against the company was unfounded and represents yet another effort to regulate crypto through intimidation and enforcement.
That said, the question of what is next remains in the hearts of crypto market participants given that since January, the SEC has brought 24 crypto-related enforcement cases, including lawsuits against the exchanges Binance, Coinbase, Kraken and Gemini.
There have been speculations on whether the SEC might go after Ethereum following its migration to proof of stake via the Merge upgrade last September.
This is because Gary Gensler, the chair of the SEC, had previously claimed that ether might qualify as a security after switching to proof of stake. Users of Ethereum are uncertain as to whether the SEC will take enforcement action.
This was a question posed to former SEC lawyer Marc Fagel by a Twitter user who asked if the SEC might go after the ETH foundation after the Ripple ruling. Fagel answered uncertainly that this depends on the evidence as well as the statute of limitations.
Depends on the evidence, as well as the statute of limitations. I suspect that, after the Ripple ruling, they may be reluctant to pursue a comparable case (and the prior administration's speech is a problem), but I don't have any insights into their current enforcement strategy.— Marc Fagel (@Marc_Fagel) July 24, 2023
In his view, after the Ripple ruling, the SEC might be reluctant to pursue a comparable case. Fagel adds some doubt by saying that he does not have insights about the SEC's current enforcement strategy.
The judge's decision in the Ripple case delivered the SEC a setback because it found that the company did not break securities law when it offered XRP to retail investors, but it did when it came to institutional investors.
Over the weekend, in new filings with Terraform Labs, the SEC hinted at appealing the Ripple ruling.