The U.S. Securities and Exchange Commission (SEC) is actively considering classifying XRP as a commodity instead of a security. This discussion has surfaced amid settlement negotiations between the agency and Ripple Labs, potentially signalling a regulatory shift.
SEC Reconsiders XRP’s Commodity Status
According to insiders cited by Fox Business correspondent Charles Gasparino, the SEC reviews XRP’s market behaviour and utility. Officials aim to determine whether XRP aligns more with commodities like Ethereum.
“The commission is assessing if XRP’s trading and utility make it more of a commodity than a security,” Gasparino wrote.
He also noted that the SEC views Ethereum as a commodity, citing its transition after its initial coin offering (ICO). Now, regulators are exploring whether XRP has followed a similar trajectory.
“The SEC believes ETH trades as a pure commodity. They are examining if they can make the same case for XRP,” Gasparino added.
This discussion unfolds as part of broader settlement talks between Ripple and the SEC. The agency previously secured a $125 million fine against Ripple and imposed restrictions on institutional XRP sales.
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However, sources claim Ripple’s legal team is pushing for better settlement terms. They argue that recent regulatory changes warrant a reassessment of penalties. Ripple’s lawyers insist the SEC’s new leadership should reset enforcement policies, preventing Ripple from being penalized for past actions. These efforts have reportedly delayed the case’s resolution.
Proposal to Position XRP as a Strategic Asset
Meanwhile, Maximilian Staudinger’s proposal has introduced another layer to the debate. He suggests designating XRP as a strategic financial asset for the U.S. economy.
Staudinger’s plan, submitted to the SEC’s crypto task force, outlines how XRP could unlock $1.5 trillion in liquidity and save $7.5 billion annually in transaction costs. His proposal recommends using XRP for government transactions, bank liquidity, and a potential national Bitcoin reserve.
XRP’s Market Performance Amid Regulatory Debate
XRP has shown mixed market performance amid these regulatory discussions. The token gained 2.6% in the last 24 hours but remains down 13% over the past week. The broader crypto market, by comparison, has declined 6.4% in the same period.
Despite this, XRP’s fully diluted valuation (FDV) has surpassed Ethereum’s. At the time of writing, XRP’s FDV stands at $229.2 billion, compared to Ethereum’s $228.1 billion.
These developments suggest XRP’s role in the financial system could soon evolve, pending regulatory decisions.
