The SEC’s lawsuit against Ripple has attracted a lot of attention over the past year, largely because it could have massive ramifications for blockchain’s development in the U.S. If the SEC wins, they’ll have regulatory authority over various digital assets, not just XRP, and that could create more barriers to development as stringent reporting and registration requirements are imposed on a wide range of blockchain-based products.
On the other hand, a victory for Ripple could mean there’s less regulatory oversight for blockchain businesses to worry about. The end result would be accelerated development in the U.S., solidifying cryptocurrencies as a viable option for investors throughout the nation.
Recent developments may help move this case toward its conclusion, but in the end really in sight? Or is it just the beginning? To find out, let’s look at where everyone currently stands.
Points Scored for Ripple
Recently, Ripple got a motion approved to receive redacted documents from the SEC. Previously, the SEC had redacted internal documents in order to remove portions that they claimed reflected the author’s opinion rather than actual facts about XRP’s status as a security.
The fact that the judge ruled in favor of having the SEC furnish these documents to Ripple may help their case—if their legal team can find anything incriminating, of course. One possibility is that they find the SEC had previously analyzed XRP (Ripple’s virtual product) or something substantially similar and had determined that it was not a security. It may be for this reason that they have been withholding these documents.
Proponents also point to the fact that Ripple’s currency XRP complies with the new language in ISO 20022, which sets forth standards for the language and structure used in payment data for international banking. It’s currently the only cryptocurrency that complies with the standard’s language, which some say is a point in favor of Ripple’s case.
The SEC’s Position
On the other hand, the SEC still claims that XRP is a security and that Ripple—or more specifically, Garlinghouse and Larsen—knowingly failed to comply with registration requirements. It currently has lawsuits filed against both Ripple and the individual defendants, and it claims that the case against Ripple cannot proceed to court without first completing the discovery phases against the other two since they (says the SEC) are actually one case.
On the other hand, Ripple wants to move forward with the case against their company. If they can score that point, the other lawsuits will likely go away. By having their last motion approved, they may have moved closer to making that happen.
Is the End in Sight?
With all of this in mind, is the end in sight? Perhaps, but we may still have several months to go. It partly depends on who the judge sides with. Will it be ruled that the case against Ripple can move forward, even if the discovery phase against the other defendants isn’t finished? Or will the respective complaints against them be treated as one case?
More time will likely work in the SEC’s favor—the cost of litigation isn’t as large a factor for them as it is for Ripple. On the other hand, things seem to be looking up for Ripple, but the end still isn’t certain. In the meantime, investors will likely have to wait and see to tell if investing in XRP will be a sound move in the future.