Is XRP a security?

The full answer

A US federal court has ruled that XRP, as a token, is not a security on its own. On July 13, 2023, in the SEC’s case against Ripple, the district court wrote that “XRP, as a digital token, is not in and of itself a ‘contract, transaction[,] or scheme’” that meets the Howey test for an investment contract. In the same opinion it found that Ripple’s Institutional Sales were “the unregistered offer and sale of investment contracts,” while its Programmatic Sales on exchanges and its Other Distributions were not.[1]

The case is over. On August 7, 2025 a joint stipulation dismissed the SEC’s appeal and Ripple’s cross-appeal, and the district court’s final judgment, with a $125,035,150 civil penalty and an injunction against Ripple, “will remain in effect,” the SEC said.[2] The full history is on the SEC lawsuit explainer.

What is the difference between XRP being a security and an XRP sale being a securities transaction?

The court asked whether each kind of sale was an investment contract under the Howey test, rather than asking the question of the token in the abstract.[1]

The result split by buyer. The court found that institutional buyers “reasonably expected that Ripple would use the capital it received from its sales to improve the XRP ecosystem and thereby increase the price of XRP,” and that buyers on exchanges “could not reasonably expect the same.”[1] On exchanges, “Ripple did not know who was buying the XRP, and the purchasers did not know who was selling it.”[1]

The judge did not rule on resales between other people. Footnote 16 says the court “does not address whether secondary market sales of XRP constitute offers and sales of investment contracts,” and that the answer “would depend on the totality of circumstances and the economic reality of that specific contract, transaction, or scheme.”[1] Whether the ruling reaches other tokens or other courts is covered in does the Ripple ruling bind others.

Did the SEC classify XRP as a commodity, and is that binding?

Yes, in guidance. SEC Release 33-11412, effective March 23, 2026, lists “XRP (XRP)” among its examples of digital commodities.[3] The same release says that “a non-security crypto asset can be offered and sold subject to an investment contract, which is a security,” and that such an asset “does not necessarily remain subject to the associated investment contract in perpetuity.”[3] That matches the court’s split: the token and the deal are judged apart. The release also states that it “does not supersede or replace the Howey test, which is binding legal precedent.”[3]

The release is an interpretation, not a statute or a court ruling. The Bitwise XRP ETF’s September 18, 2026 filing with the SEC says the release “does not have the force and effect of law, does not create binding legal rights or obligations, and is not binding on courts or other regulatory authorities,” and that “it may be modified or withdrawn by a future administration.”[4] Congress has not settled the point either: the bill that would have done so is traced on what happened to the CLARITY Act.

Is XRP a commodity under CFTC oversight, and what does that change?

The Commodity Futures Trading Commission (CFTC) joined the March 2026 release. In it, the CFTC said that it “and its staff will administer the Commodity Exchange Act consistent with the interpretation.”[3]

That oversight has limits today. Troutman Pepper Locke wrote on September 25, 2026 that “the CFTC has anti-fraud and anti-manipulation enforcement authority over spot digital asset commodity markets, but it does not have a general statutory program to register or supervise” them.[5] Futures are a different market: CME Group said the first trade in its XRP futures took place on May 18, 2025.[6]

My reading of these sources: the commodity label tells US platforms and funds how the SEC and CFTC say they will treat XRP itself, but it does not create a federal registration scheme for the exchanges where people buy it. Whether a given platform is registered where you live is a separate check, covered in how to check a crypto platform is registered. How regulators outside the US classify XRP is on XRP regulation outside the US.

What is the strongest case against treating the question as settled?

Another judge in the same district disagreed with the Ripple reasoning. Eighteen days after the Ripple ruling, Judge Rakoff of the same court declined to follow it in SEC v. Terraform Labs, writing that “Howey makes no such distinction between purchasers.”[7] Because the SEC’s appeal and Ripple’s cross-appeal were dismissed, the Second Circuit did not rule in SEC v. Ripple.[2] The sources cited here do not show whether any other appeals court has addressed the split.

The SEC’s commodity list is the current agency view. The Bitwise filing says the release “may be modified or withdrawn by a future administration.”[4] The case that XRP’s position could change is set out on could XRP’s regulatory position reverse.