XRP Leads Crypto Push for Clear Network Maturity Standards

XRP is taking a proactive stance in the ongoing regulatory debates by urging the U.S. Securities and Exchange Commission (SEC) to adopt a “network maturity” standard rather than depending solely on decentralization. Ripple, the company behind XRP, contends that Congress, not the SEC, should be responsible for closing any gaps in crypto legislation.

In a recently submitted letter to the SEC’s Crypto Assets and Cyber Unit, Ripple outlined its concerns with the SEC’s current approach. This move comes as a direct response to remarks by Commissioner Hester Peirce regarding the classification of tokens. Ripple emphasized that most fungible tokens traded on secondary markets do not fulfill the criteria of securities under existing legal definitions.

The company argues that the nature of these digital assets lacks ongoing formal obligations between issuers and purchasers, which are a hallmark of traditional investment contracts. Ripple drew upon legal analyses and its own 2023 court case — which ruled that XRP XRP does not qualify as a security in secondary market transactions — to support its claim. However, the court did acknowledge that some early XRP sales to institutional investors did constitute investment contracts.

To provide guidance for future regulatory clarity, Ripple proposed a structured framework. According to this proposal, a digital token may only be categorized as a security if the issuer has outstanding material obligations or if holders maintain enforceable legal claims against the issuer. Ripple defines these “material promises” as commitments like delivering a functional network or providing returns.

The company argues that in the absence of such obligations, oversight through securities law becomes unjustified. They stressed that imposing securities regulations under such circumstances would lack merit and stifle innovation unnecessarily. Ripple’s proposal is designed as a step toward modernizing regulatory approaches while acknowledging the nature of evolving blockchain ecosystems.

Ripple also took issue with the SEC’s current dependence on “decentralization” as a key metric for regulating crypto assets. The term, Ripple argued, is ambiguous and inconsistently used across legal, technical, and policymaking circles. Instead, Ripple recommended evaluating a network based on its “maturity.”

Under this network maturity model, three measurable benchmarks would apply for a digital asset to be exempt from securities classification:

• A sufficiently high market capitalization
• Operation on a public and permissionless blockchain for a predetermined period
• The absence of centralized control over the network’s essential features

Ripple claims that tokens fitting these parameters are already deeply embedded in financial markets. Their liquidity, transparency, and inclusion in regulated investment vehicles — such as ETFs and futures — demonstrate that they should not be bound by traditional securities laws. These assets have shown they can operate within open, well-functioning markets.

As Ripple stated in the letter: “We understand the SEC’s concern that the current state of the law may allow bad actors to evade accountability… However, if there is a gap in the law, it is Congress’s — not the SEC’s — to fill.”

The company reiterated its call for Congress to intervene by laying down clear legislative guidelines for the crypto industry. Meanwhile, the SEC, by aligning with this proposed maturity model, could enable consistent and fair treatment of digital assets that have grown beyond the scope of their original issuers.

This proposal underscores the necessity for regulatory evolution as the blockchain industry matures. By adopting a maturity-based lens instead of relying on the murky concept of decentralization, regulators can more effectively separate legitimate protocols like XRP from speculative ventures, ensuring both innovation and investor protection remain balanced.

If accepted, Ripple’s standard may very well become a pivotal influence in shaping how U.S. regulatory bodies oversee emerging blockchain infrastructures in the years to come.

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

For more details on Hester Peirce, view her profile here. You can also read Ripple’s official submission to the SEC here.