SEC Reportedly Considering Classifying XRP as a Commodity

The U.S. Securities and Exchange Commission (SEC) is contemplating a significant regulatory shift regarding XRP, potentially classifying it as a commodity rather than a security. This development appears to arise from ongoing settlement negotiations between the SEC and Ripple Labs, hinting at a possible change in the agency’s approach to cryptocurrency regulation.

### SEC Weighs XRP’s Commodity Status

Senior Fox Business correspondent Charles Gasparino has reported that the SEC is currently re-evaluating XRP’s utility and its market behavior to assess its classification alongside commodities such as Ethereum (ETH). Insiders indicate that one of the critical points of analysis is whether XRP continues to trade and function in a manner that positions it more as a commodity instead of a security.

Gasparino notes that the comparison to Ethereum is a pivotal component of this discussion. Ethereum, which was initially distributed through an initial coin offering (ICO), managed to transition into a commodity status, thereby avoiding SEC scrutiny. The agency is contemplating if XRP has similarly evolved since its launch, which could mitigate the regulatory burdens currently placed on Ripple.

Previous rulings against Ripple have included a substantial fine of $125 million and a permanent injunction against institutional sales of XRP. However, Ripple’s legal representatives are leveraging this reassessment as they negotiate for more favorable settlement conditions, asserting that any shifts in regulatory stance justify a re-evaluation of the penalties imposed on the company.

### A Proposal for XRP’s Future

In related discussions, Maximilian Staudinger has proposed that XRP be designated as a strategic financial asset, which could transform its role in the U.S. financial ecosystem. His proposal, submitted to the SEC’s recently established crypto task force, asserts that integrating XRP into the national financial system could unlock $1.5 trillion in liquidity and save approximately $7.5 billion in annual transaction costs.

Staudinger’s vision includes fast-tracking the use of XRP for government transactions, enhancing bank liquidity, and potentially supporting a national Bitcoin reserve. As these discussions unfold, XRP’s market performance has been mixed. Despite a recent uptick of 2.6% in the past 24 hours, the digital asset has seen a 13% decline over the past week, trailing the broader crypto market’s drop of 6.40%.

Notably, XRP’s fully diluted valuation has recently surpassed that of Ethereum, reaching $229.2 billion, compared to Ethereum’s $228.1 billion. This valuation milestone underscores XRP’s renewed market significance amid the evolving regulatory landscape.

With discussions continuing between Ripple and the SEC, the outcome of this regulatory evaluation could have profound implications not only for XRP but also for the broader cryptocurrency market.