A new report suggests that the U.S. Securities and Exchange Commission (SEC) is actively reconsidering XRP’s classification, sparking speculation about a potential shift in regulatory stance.
As part of ongoing settlement talks with Ripple, the SEC is reportedly evaluating whether XRP should be treated as a commodity rather than a security—a move that could reshape the legal landscape for digital assets.
XRP vs. Ethereum: A Precedent for Commodities?
One of the biggest factors influencing the debate is how Ethereum (ETH) was handled in comparison to XRP.
According to financial journalist Charles Gasparino, the SEC is assessing whether XRP’s market behavior and utility align more closely with a commodity, like Ethereum, rather than a security.
Ethereum initially launched through an Initial Coin Offering (ICO)—similar to XRP’s early distribution—yet ETH was never subjected to legal action like Ripple. Instead, the SEC eventually recognized Ethereum as a commodity, allowing it to operate without securities-related restrictions.
Now, regulators are questioning: Can the same logic be applied to XRP?
XRP’s Utility: A Key Factor in Classification
Crypto industry analysts believe that XRP’s real-world use case could play a crucial role in the SEC’s decision.
1. Bridge Currency for Global Payments – XRP powers cross-border transactions, reducing costs and settlement times for financial institutions.
2. Decentralized Ledger – Unlike traditional banking systems that rely on intermediaries, XRP Ledger enables direct, near-instant fund transfers.
3. Active Trading and Payment Adoption – XRP is widely used as a payment instrument, strengthening its classification as a utility-based asset rather than a security.
Supporters argue that these characteristics align XRP with commodities rather than investment contracts, questioning the SEC’s previous classification approach.
Ripple CTO Highlights Major Difference with Ethereum
Ripple’s Chief Technology Officer, David Schwartz, has also weighed in on the debate, pointing out a crucial distinction between XRP and Ethereum.
- Ethereum was privately sold before its blockchain existed, meaning early investors financed the project before it had a functional network.
- XRP, on the other hand, was fully operational from the beginning, raising questions about why it was treated differently by regulators.
This inconsistency fuels ongoing concerns about the fairness of the SEC’s regulatory approach, especially as XRP remains one of the most actively used digital assets for transactions.
Regulatory Disparity: Why Was XRP Targeted but Not ETH?
The SEC’s contrasting treatment of Ethereum and XRP has been a hot topic within the crypto community.
1. Ethereum launched with an ICO and centralized token distribution, yet was later granted commodity status.
2. XRP has always operated on a decentralized ledger, yet Ripple was hit with a high-profile lawsuit.
Many within the crypto industry argue that Ethereum benefited from regulatory leniency, allowing it to mature into a dominant digital asset. Meanwhile, XRP has faced continuous legal scrutiny, despite its utility-driven nature.
This disparity in enforcement raises concerns about potential regulatory bias, as well as the lack of consistent guidelines for classifying digital assets.
XRP’s Future: Could the SEC Rethink Its Approach?
As settlement talks progress, XRP’s classification remains a major point of contention. If the SEC ultimately grants XRP commodity status, it could have far-reaching implications:
1. Regulatory Clarity – A ruling in favor of XRP could set a precedent for how other digital assets are classified.
2. Policy Revisions – The SEC may be forced to reassess its approach, potentially leading to more transparent guidelines for crypto regulation.
3. Market Impact – If XRP is officially recognized as a commodity, it could trigger renewed investor confidence and broader institutional adoption.
For now, the crypto world watches closely, as the SEC’s decision on XRP could redefine the regulatory framework for the entire digital asset space.
Victor Swaezy
Victor Swaezy is a crypto-journalist with more than 3 years of experience in covering blockchain technology and digital currencies news. Known for his comprehensive reporting, Victor has contributed to leading industry publications, providing market participants with the required knowledge to make informed decisions. When he is not working, he loves to watch movies and have a good time.