Ripple’s Win Against the SEC Marks a Milestone for Crypto in the U.S.

The first half of 2023 was an exciting time for Bitcoin, with new innovations, such as the emergence of on-chain Bitcoin NFTs and fungible tokens following the creation and release of Ordinal Theory, making waves. 

The SEC also threw their name in the mix when it went after Coinbase, Binance, and other crypto businesses this year - either to collect a hefty fine or to further investigate how they’ll regulate crypto and related businesses in the U.S. 

July was no exemption! 

In fact, the SEC is involved in both major news this month. One was the lawsuit against Ripple, which I will get into in just a second. The other was receiving renewed applications for Bitcoin ETFs from several Wall Street giants. 

Both events sent waves through the wider crypto community and filled it with new enthusiasm. 

Ripple Wins Lawsuit, But the Battle for Sensible Crypto Regulation in the US is Far From Over ⚖️

The first major event this month was the Ripple vs. SEC lawsuit. In case you didn’t know, the SEC is currently going after a lot of crypto companies and projects for the sale of their tokens. 

They, or shall we say Gary Gensler, argue that most of these tokens are securities. 

As you can imagine, most of these companies or projects haven’t registered with the SEC. Therefore, if they end up getting sued, a lot of stakes are at play. Granted, there might be companies who can afford fines, but still, you don’t want to have to pay extra for your innovation or product, especially if the authorities have (still) not developed a regulatory framework for your industry. 

Ripple Labs, the company behind Ripple, is of the same opinion and received the opportunity to get into the ring with the SEC. Like most lawsuits in the U.S., this suit will take a long time and go through many different phases. 

So far, Ripple has won the first round. 

U.S. District Judge Analisa Torres ruled that the XRP token’s sale to the general public in secondary markets did not breach U.S. Securities Law. In other words, she said that XRP is not a security for retail investors. 

This ruling is a win for the digital asset industry! 🏆

Why? Because it has been worried about most cryptocurrencies becoming classified as securities in the U.S. 

And now they have a court ruling that states that a cryptocurrency trading on secondary exchanges is not deemed as securities. That’s ammunition for digital asset businesses who’ll have to go up against regulators claiming otherwise. 

While the ruling was positively received by the wider crypto community (resulting in a massive price jump in XRP and a rally in altcoins across the board), you should also know that Judge Torres did state that Ripple violated federal securities law by selling XRP directly to sophisticated investors. 

That’s not great news for those sophisticated investors who’ve purchased XRP, but for crypto-loving retail investors and digital asset businesses in the U.S., this judgment is clearly a win. 

The SEC announced they’ll appeal the decision and go after Ripple in higher courts. Their goal is to prove that the XRP token is also a security for retail investors. I’m sure I’ll get more opportunities in the future to write about this lawsuit, as this one looks like it will be going on for a while. 

For now, we can celebrate this win for the industry! 🎉

Bitcoin ETF Issuers Re-File in Hope to Gain SEC Approval 📈

The second story is more interesting for all my Bitcoiners out there. 

You read about the filling of various Bitcoin Spot ETFs by Wall Street giants like BlackRock or Fidelity in last month’s edition of my newsletter. 

Well, there’s been some developments. 

Earlier this month, the SEC denied all of the Bitcoin ETF applications because they deemed them inadequate. They stated that these highly regulated institutions need surveillance-sharing agreements with U.S. exchanges to safeguard the underlying assets. 

This is weird because this is what BlackRock and alike already need to do anyway. Apparently, all of them didn’t mention such sharing agreements in their first applications, which is why the SEC initially rejected all of them. 

One might think that this was it and that Wall Street isn’t getting into Bitcoin after all. 

Wrong! 

Every single issuer went back to the drawing board and refiled their Bitcoin ETF application. This time, they seemed to have done a better job as the SEC accepted their re-applications and is now taking a closer look at how these Bitcoin Spot ETFs could become a reality. 

Although the Bitcoin price dipped slightly this month, mainly because the initial denial of the SEC was in early July, the Bitcoin community is hyped up and ready to get more institutional investors on board. 

This could be big for the Bitcoin ecosystem because the cash these institutions will bring in will likely be a huge step up from what we’ve seen so far! 

We’re not there yet, because the SEC hasn’t approved any Bitcoin Spot ETF to date. But the fact that they accepted and are now taking a closer look is a rather bullish sign if you ask me. 

Super Mario Got Me Back in the Cinema Just in Time for “Barbenheimer” 🍿

After listening to my good friend and Proof of Words Podcast co-host Matt go on about the new Mario movie, I went to go see it. 

That was the first time I went to the movies before the pandemic. 

And you know what? It was awesome! 

OK, it wasn’t Tarantino, but it was still good. 😊 

We had our good friend Ben Young on the podcast a few weeks back to discuss films. That was one of the funniest episodes we recorded so far. But who am I to judge, have a look yourself!

Your stacker in sats, 

Patrick Lowry

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