While Ripple has yet to launch its much-anticipated stablecoin, the United States Securities and Exchange Commission (SEC) has classified the upcoming dollar-backed token as an “unregistered crypto asset.”
The SEC made the classification in a brief responding to Ripple’s objections to its opening relief brief. Well-known XRP community figure Wrath of Kahneman (WOK) shared this development on the X community.
The SEC classified Ripple’s stablecoin as an “unregistered crypto asset,” while revealing the company’s history of selling XRP as an unregistered security.
According to the SEC, Ripple has been involved in unregistered sales of XRP since 2013. Additionally, it revealed that the company also plans to issue a stablecoin that will be considered an unregistered crypto asset.
Additionally, the SEC noted that Judge Analisa Torres found that Ripple’s sales of XRP to institutional clients from 2013 to 2020 constituted investment contracts.
The regulator added that Ripple did not dispute that all institutional sales following its complaint violated the law.
The SEC’s claims sparked a reaction from XRP community members, with Wrath of Kahneman stating:
“It feels like they’re trying to sneak something in.”
Ripple unveils plans to launch stablecoin
In April, Ripple unveiled plans to enter the stablecoin market, which it expects to exceed $2.8 trillion by 2028. Ripple intends to enter the market early, planning to launch a stablecoin on the XRP Ledger (XRPL) and Ethereum networks later this year.
The company said the upcoming stablecoin will bridge the gap between traditional finance (TradFi) and the crypto industry. Despite Ripple’s claims, many believe that the motivations behind stablecoins go beyond merging the crypto and TradFi sectors.
In particular, Fred Rispoli, a lawyer who supports XRP, claimed that Ripple intended to launch the stablecoin to cater to the needs of its U.S. ODL partners. This means that ODL customers in the United States can utilize the stablecoin for cross-border settlements instead of using XRP.
The SEC wants Judge Torres to impose a permanent injunction on Ripple’s future ODL-related XRP sales to prevent the company from further violating federal securities laws.
If the judge agrees to this request, Ripple can still provide ODL services in the United States. However, U.S. customers will use Ripple’s upcoming stablecoin instead of XRP for ODL transactions.
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