Ripple calls on SEC to ditch enforcement-first approach after key legal victory

Crypto exchange Ripple asks the SEC to focus on setting clear regulatory guidance for crypto companies and abandon past enforcement strategies.

According to Ripple, the past commission’s actions created confusion for the crypto industry, as the agency enforced standards that were not written into law. 

Ripple says the past SEC’s enforcement actions aroused confusion in the crypto industry

Responding to a February 21, 2025, SEC statement titled “There must be some way out of here” (the “RFI”), Ripple insisted that the commission needs to prioritise providing law-first clarity for crypto companies.

In its letter, the exchange referenced Bob Dylan’s lyric, “There’s too much confusion, I can’t get no relief,” claiming the previous administration only generated confusion. 

It further argued that previous enforcement strategies were inconsistent with the Crypto Task Force’s goal of establishing clear criteria for determining whether an asset qualifies as a security or is part of an investment contract.

Echoing this sentiment, Stuart Alderoty, Ripple’s chief legal officer, even claimed the commission thrived on confusion to mask its failure to follow the law. 

Today, @Ripple submitted its response to Commissioner @HesterPeirce’s Feb. 21 statement: “There must be some way out of here,” calling for public input on crypto taxonomy rules.

That Dylan lyric continues: “There’s too much confusion, I can’t get no relief.” The prior…

— Stuart Alderoty (@s_alderoty) March 21, 2025

The exchange now wants the SEC to provide more clarity and return to first principles. It commented:

“As the Crypto Task Force appears to recognize, the SEC should return to first principles and, within the bounds of existing statutes, strive to provide straightforward market guidance that has been absent to date.” – Ripple

Ripple even claimed that the SEC does not have jurisdiction over most digital assets and their transactions to date. It added that the agency can only regulate  “securities” and their transactions as defined by the Securities Act.

The crypto firm also argued that staking and yield on public networks differ from securities and asked them to clarify the policies. 

Additionally, the company reaffirmed its backing for safe harbor provisions and regulatory sandboxes, an approach that has worked well in the UK, Switzerland, and Singapore.

The exchange believes the Token Safe Harbor Proposal could allow blockchain projects to grow without being too quickly tagged as securities.

Ripple believes the SEC misused some legal definitions, including the Howey Test

Ripple, however, accused the SEC of distorting some of the legal requirements for exchanges, including the application of the Howey Test. The crypto company claimed that the agency misused the test to classify digital assets as securities, even without binding agreements or profit participation requirements. 

Ripple claimed that this approach only created uncertainty and hindered blockchain projects from launching or expanding in the US.

The exchange, however, agreed with the SEC’s decision to categorize meme coins as non-securities, claiming it’s a step toward clear regulation. Moving forward, the firm believes that all future regulation should be based on existing laws and not on arbitrary constructed norms that could unsettle the markets.