The U.S. Securities and Exchange Commission (SEC) has been internally discussing whether Ripple’s XRP could be classified as a security, according to newly revealed documents. As the lawsuit between the SEC and Ripple enters settlement talks, speculation is growing over the potential approval of a spot XRP exchange-traded fund (ETF).
Coinbase, the world’s largest cryptocurrency exchange, disclosed over 10,000 documents on the 7th in response to a Freedom of Information Act request. These records included emails between the SEC and other U.S. government agencies. The documents show that since 2021, the SEC has been assessing the impact on the XRP blockchain if Ripple were to dissolve and has internally debated whether XRP exhibits characteristics of a security.
One email read, “If Ripple were to disappear, what risks could materialize for the XRP network? Could we gather opinions on this?” If the SEC views Ripple’s existence as critical to the blockchain’s sustainability, this could serve as a key argument in determining XRP’s classification as a security.
In contrast, Ethereum has already shown clear signs of being treated as a security by regulators. The New York Attorney General’s office labeled Ethereum an “unregistered security” in 2023 when suing the exchange KuCoin for violating state securities and commodities laws. Later that June, the office requested the SEC to formally recognize Ethereum’s security status.
Amid reports that the SEC and Ripple are nearing a resolution in their lawsuit, industry expectations are rising that regulatory uncertainty around XRP may soon clear—potentially paving the way for an ETF approval. Notably, the SEC greenlit spot Ethereum ETF trading last July, allowing it to begin full-scale trading in U.S. markets.
The SEC has previously dropped investigations into Ethereum, and former SEC Chair Gary Gensler avoided giving definitive answers on the legal status of XRP and Ethereum. However, the agency’s recent decision to dismiss parts of its lawsuits against major firms like Coinbase has led to speculation that its regulatory stance may be softening.
