Cryptocurrency prices soared Thursday (July 13) after a court ruling that is seen as a major victory for the cryptocurrency market.
The news caused a surge in the price of XRP, almost doubling in value, Bloomberg reported Thursday (July 13). Shares of other tokens like Solana and Cardano, as well as of cryptocurrency-dependent companies like Coinbase Global Inc., MicroStrategy and Marathon Digital, rallied in response.
In the decision in the Ripple vs. SEC case, U.S. District Judge Analisa Torres ruled that the cryptocurrency XRP is a security when offered to institutional investors but not to the general public.
Cryptocurrency and digital asset industry experts saw the news as a huge win for the industry, the report said.
Arthur G. Jakoby, co-chair for securities litigation and enforcement at Herrick Feinstein, said, “Judge Torres’ decision in Ripple is a huge win for the cryptocurrency and digital asset industry. If upheld on appeal, this decision significantly narrows the SEC’s jurisdiction over the crypto market.”
Elliott Stein, a Bloomberg Intelligence analyst, commented in the report, “This underscores that direct sales of digital assets by an issuer will often be securities, but other sales, most notably sales on the secondary market, are unlikely to be deemed securities, which is a key argument in Coinbase’s defense against the SEC.”
According to Daniel Tramel Stabile, a partner at Winston & Strawn, said, per the report, “My overall impression is this is a positive decision for the digital asset industry. The court expressly concluded that XRP is not, in and of itself, a security. Instead, the focus must be on the circumstances of the offering itself.”
The question addressed during the long-running legal battle, whether cryptocurrencies are or are not securities, is key to the use of crypto as a payments currency, both because it is far harder to issue digital assets if they must follow securities regulations, and because paying with securities triggers a capital gains reporting requirement with the IRS.
As PYMNTS reported Thursday, the ruling will set a legal precedent for those firms alleged to have been issuing token-securities non-compliantly and may undermine certain assertions of the SEC.