Ripple’s Legal Battle Nears End—Will XRP Be Classified Like Ethereum?

• Charles Gasparino drew a comparison between Ethereum’s issuance and that of XRP, suggesting that they were not fundamentally different.
• With Paul Atkins anticipated to replace Gary Gensler as SEC Chair, regulatory clarity for digital assets may finally be on the horizon.

Ripple Labs, the company behind the cryptocurrency XRP, has been entangled in a legal battle with the U.S. Securities and Exchange Commission (SEC) since December 2020. The SEC alleged that Ripple’s sale of XRP constituted an unregistered securities offering, raising concerns about XRP’s classification under U.S. securities laws.

According to Fox Business journalist Eleanor Terrett, the case is currently delayed as Ripple seeks better settlement terms. Under Mark Uyeda’s leadership, the SEC has withdrawn from multiple high-profile legal battles. As we previously reported, the regulator closed its investigations into Robinhood, Coinbase, and Gemini. This has fueled speculation that the SEC may take a similar approach with Ripple, possibly waiting for Paul Atkins to be confirmed as SEC Chair before making its next move.

XRP vs. Ethereum: A Regulatory Debate

A key point of contention in the lawsuit is the regulatory treatment of XRP compared to Ethereum (ETH). Fox Business Senior Correspondent Charles Gasparino recently shared on X that the SEC is debating whether XRP’s current trading and utility align more with a commodity rather than a security.

SCOOP: Off of @EleanorTerrett's scoop from yesterday on the @Ripple – @SECGov settlement negotiations, 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. I am told the…

— Charles Gasparino (@CGasparino) March 13, 2025

Gasparino pointed out that Ethereum was initially issued through an Initial Coin Offering (ICO), a fundraising method where investors buy newly issued tokens, much like how companies raise capital through an Initial Public Offering (IPO) in the stock market. He noted that both ETH and XRP were used to finance platform development, drawing parallels between their early funding models.

However, while Ethereum was never sued, Ripple faced legal action. The SEC believes Ethereum has since evolved into a commodity and is now reconsidering XRP’s classification.

Ripple Labs CTO David Schwartz challenged this perspective, arguing that Ethereum was privately sold before a blockchain or ledger even existed, whereas XRP was not. This fundamental difference in distribution models could influence XRP’s regulatory standing.

ETH was privately sold by an issuer prior to any ledger or blockchain existing. XRP was not.

— David "JoelKatz" Schwartz (@JoelKatz) March 13, 2025

In July 2023, Judge Analisa Torres of the U.S. District Court for the Southern District of New York ruled that XRP is not a security when sold on public cryptocurrency exchanges. However, institutional sales of XRP could still be classified as securities offerings under certain conditions. By August 2024, a federal court ordered Ripple to pay a $125 million penalty to the SEC for violating securities laws, adding to the company’s already substantial legal expenses, which have exceeded $100 million. With a key deadline looming on April 16, 2025, Ripple is required to respond to the SEC’s appeal. However, if the SEC decides to drop the case before then, the lawsuit could be dismissed altogether.

XRP has surged 3.29% in the last 24 hours but has dropped 9.46% over the past week to now trade at $2.31. Analysts remain optimistic, believing that if the SEC withdraws its case, XRP could experience a rally, potentially climbing past its all-time high of $3.80 to $4.00.