SEC Reportedly Considering Classifying XRP as a Commodity

Potential Shift in Regulatory Stance Could Impact Ripple Settlement Talks

The U.S. Securities and Exchange Commission (SEC) is reportedly reconsidering its stance on XRP, exploring whether the digital asset should be classified as a commodity rather than a security.

SEC Reassesses XRP’s Status Amid Settlement Talks

According to senior Fox Business correspondent Charles Gasparino, the SEC is actively evaluating XRP’s market function and utility to determine if it aligns more closely with commodities like Ethereum (ETH). This reassessment has surfaced during ongoing settlement negotiations between the agency and Ripple Labs, potentially indicating a shift in regulatory strategy.

“One issue that is being weighed by the commission is whether $XRP continues to trade and have a utility that makes it more a commodity and not a security,” Gasparino reported.

The SEC is reportedly looking at Ethereum’s regulatory journey as a precedent. Despite ETH initially launching through an initial coin offering (ICO), the agency ultimately classified it as a commodity, sparing it from regulatory action. Now, the SEC is considering whether XRP has similarly evolved into a commodity over time.

“The SEC believes ETH trades as a pure commodity. They are trying to determine if the commission can make that case with $XRP,” Gasparino added.

Ripple Pushes for Better Settlement Terms

This discussion comes amid broader settlement talks between Ripple and the SEC. Previously, the regulatory body secured a partial victory against Ripple, imposing a $125 million fine and placing restrictions on institutional sales of XRP.

However, Ripple’s legal team is advocating for more favorable settlement terms, arguing that shifting regulatory perspectives justify a review of the penalties. Lawyers representing the company assert that if the SEC’s leadership is revising its enforcement policies on crypto, then Ripple should not be held accountable for past regulatory uncertainties.

Proposal to Designate XRP as a Strategic Asset

Adding another layer to the ongoing debate, financial expert Maximilian Staudinger has proposed classifying XRP as a strategic financial asset. His plan, submitted to the SEC’s newly formed crypto task force, suggests integrating XRP into the U.S. financial system.

According to Staudinger, this move could unlock $1.5 trillion in liquidity while saving an estimated $7.5 billion annually in transaction costs. He also recommends implementing XRP for government transactions, improving bank liquidity, and even considering a national Bitcoin reserve.

Market Performance: XRP vs. Ethereum

XRP has shown mixed market performance amid these discussions. While it saw a 2.6% gain in the last 24 hours, the asset remains down 13% over the past week, underperforming the broader crypto market, which has declined 6.4%.

Interestingly, XRP’s fully diluted valuation (FDV) has now surpassed Ethereum’s. At the time of writing, XRP’s FDV stands at $229.2 billion, slightly edging out ETH’s $228.1 billion.

As the SEC deliberates on XRP’s classification, the outcome could have significant implications for Ripple, the broader crypto market, and the future regulatory landscape.