The recent claim by the U.S. Securities and Exchange Commission (SEC) that XRP, the digital asset developed by Ripple, lacks intrinsic value has ignited intense debates within the cryptocurrency community. This assertion, made in a motion to Judge Torres, has raised eyebrows, particularly due to the SEC’s seemingly inconsistent treatment of other digital assets such as Ethereum.
The SEC’s argument regarding XRP’s intrinsic value appears to be in tension with the established Howey Test, a legal framework used to determine whether an asset qualifies as a security.
The Howey Test stipulates, “The test is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others. If that test be satisfied, it is immaterial whether the enterprise is speculative or non-speculative or whether there is a sale of property with or without intrinsic value.”
In its response to Ripple’s Summary Judgment (SJ) motion, the SEC acknowledged the significance of the Howey Test. However, paradoxically, it reiterated its position that XRP lacks intrinsic value in its motion seeking permission to file an interlocutory appeal.
This apparent inconsistency has led to speculation about a potential double standard employed by the SEC. Many are questioning why the SEC is drawing a distinction between XRP and other digital assets or commodities that possess intrinsic value. One prevailing theory suggests that the SEC might be aiming to establish a distinct legal category for digital assets, effectively separating them from conventional commodities and assets.
The SEC’s stance on XRP carries significant implications for the wider cryptocurrency industry. Should the SEC successfully argue that XRP lacks intrinsic value, it could establish a precedent that significantly impacts the classification and regulation of other digital assets. As the crypto community closely monitors these developments, the SEC’s approach to this case could potentially reshape the regulatory landscape for cryptocurrencies as a whole.
