XRP Lawsuit Ruling Won’t Redefine Crypto Legal Status

The ongoing legal battle involving XRP continues to draw attention, but legal experts assert that the upcoming verdict in Ripple’s case will not redefine the legal framework for crypto assets in the United States.

Attorney Bill Morgan weighed in on recent claims suggesting that U.S. District Judge Analisa Torres is poised to make a landmark ruling in Ripple’s ongoing legal issues with the SEC. These claims surfaced after market commentator John Squire posted on X, suggesting that the judge’s anticipated decision could change how cryptocurrencies are evaluated legally across the United States.

Squire’s comments implied that Judge Torres could determine whether digital assets like XRP are treated under U.S. law as commodities or securities—an outcome that might affect the entire crypto industry. However, Morgan quickly corrected this portrayal, labeling it as inaccurate and asserting that the judge’s upcoming decision does not carry the kind of sweeping legal implications being suggested.

According to Morgan, the ruling expected from Judge Torres is limited in scope. It centers on a joint request from both Ripple and the SEC for an indicative ruling—a decision on whether exceptional circumstances justify a reduced financial penalty for Ripple and the removal of a permanent injunction on their XRP sales to institutional clients.

This position was clarified further by Morgan, who stated that the judge is evaluating whether conditions exist to lower Ripple’s penalty to $50 million while lifting certain restrictions. This legal step is procedural and does not constitute a new interpretation of how cryptocurrencies are classified legally in the U.S. financial system.

Previously, Judge Torres rejected a similar joint motion due to procedural deficiencies. The court found that Ripple and the SEC failed to substantiate claims of exceptional circumstances needed for the court to grant the relief they sought. In June, the two parties resubmitted their motion, this time addressing the previously noted issues. However, the court has yet to issue a response to the updated filing.

Morgan reiterated that the outcomes of this motion do not revise any elements of the 2023 summary judgment in Ripple’s favor. He emphasized that both parties agreed not to question or modify the foundational decision reached in that summary judgment. In a move supporting his argument, Morgan shared a portion of the joint legal filing that underscored this agreement.

In that decision from 2023, Judge Torres ruled that XRP itself is not a security. She drew a distinction between XRP sales: those made to institutional buyers were deemed investment contracts, while transactions conducted through digital asset exchanges were not. This nuanced legal stance significantly shaped the way crypto regulation is currently understood, indicating that while tokens like XRP may be involved in security-related transactions, they are not inherently securities themselves.

While some members of the crypto community are hopeful that the upcoming ruling could lead to clarity on digital asset classifications, legal analysis makes it clear that this decision will remain narrowly focused on Ripple’s penalty and injunction matters.

Adding complexity to the crypto regulatory environment, the U.S. Senate has recently introduced a new legislative proposal. This bill seeks to provide clearer criteria for deciding whether a cryptocurrency should be considered a security or a commodity, offering the kind of regulatory clarity the industry has long awaited.

Related: Expert Advice: Sell XRP If You’re Confused

In summary, while the Ripple case remains a pivotal legal battleground for the crypto industry, experts caution against overstating the implications of the immediate decision at hand. As it stands, the upcoming ruling will not change the legal definition of XRP or any other digital asset in the U.S. Instead, it will determine whether Ripple faces a lesser penalty and fewer restrictions in its ongoing business operations.