The U.S. Securities and Exchange Commission (SEC) is reportedly considering classifying XRP as a commodity rather than a security, marking a potential shift in its regulatory approach. According to Fox Business correspondent Charles Gasparino, the agency is re-evaluating XRP’s utility and market behavior to determine whether it aligns more with commodities like Ethereum (ETH).
Could XRP Follow Ethereum’s Path?
Gasparino noted that the SEC is assessing XRP’s trajectory, comparing it to Ethereum’s evolution. Despite ETH’s initial coin offering (ICO), the SEC ultimately deemed Ethereum a commodity, allowing it to bypass further regulatory scrutiny. The commission is now exploring whether XRP has undergone a similar transition from a security to a commodity.
“The SEC believes ETH trades as a pure commodity,” Gasparino stated, adding that regulators are trying to determine if they can apply the same logic to XRP.
This debate is taking place amid settlement negotiations between the SEC and Ripple Labs. Ripple is pushing for more favorable terms after being fined $125 million and facing restrictions on institutional XRP sales. Ripple’s legal team argues that recent shifts in regulatory enforcement warrant a reassessment of penalties imposed against the firm.
Proposal to Integrate XRP Into the U.S. Financial System
Adding another layer to the discussion, Maximilian Staudinger has proposed designating XRP as a strategic financial asset. His plan, submitted to the SEC’s newly established crypto task force, suggests that integrating XRP into the U.S. financial system could unlock $1.5 trillion in liquidity and save $7.5 billion annually in transaction costs.
Staudinger’s proposal also explores using XRP for government transactions, enhancing bank liquidity, and even creating a national Bitcoin reserve backed by XRP.
XRP’s Market Performance Amid Uncertainty
While XRP saw a 2.6% price increase in the last 24 hours, the token has experienced a 13% decline over the past week, underperforming against the broader crypto market’s 6.4% drop. However, despite its volatility, XRP’s fully diluted valuation (FDV) has surpassed Ethereum’s, reaching $229.2 billion compared to ETH’s $228.1 billion.
As settlement negotiations continue and the SEC deliberates XRP’s commodity status, the outcome could have significant implications for Ripple and the broader crypto industry. If XRP is officially classified as a commodity, it could lead to greater institutional adoption and reduced regulatory uncertainty, potentially setting a precedent for other cryptocurrencies in similar legal battles.
