SEC Officially Classifies XRP as a Digital Commodity

The U.S. SEC has officially included XRP in its newly introduced crypto taxonomy, classifying the asset as a digital commodity.

In particular, this move confirms XRP is not a security under federal law. Notably, the decision places XRP alongside major crypto assets like Bitcoin, Ethereum, and Solana within the same category. The latest further cements XRP’s regulatory clarity in the United States.

Key Points

• SEC officially classifies XRP as a digital commodity, not a security under U.S. law.

• XRP joins Bitcoin, Ethereum, and Solana as a core asset in functional crypto systems.

• SEC’s new framework moves away from the Howey Test, clarifying that most crypto assets aren’t securities.

• CFTC alignment signals broader regulatory clarity, easing adoption and exchange listings for XRP.

SEC Introduces Five Crypto Categories

Under the new framework, the U.S. SEC divides crypto assets into five categories:

• Digital commodities
• Digital collectibles
• Stablecoins
• Digital tools
• Digital securities

Among these, only digital securities fall under securities regulation. Assets categorized as digital commodities, now including XRP, are non-securities by default. Meanwhile, certain transactions involving them may still qualify as investment contracts depending on context.

XRP Part of Functional Crypto Systems

According to the SEC’s guidance, digital commodities derive their value from the programmatic operation of a functional crypto system, rather than from the managerial efforts of a central entity.

In this context, the SEC recognizes XRP as a token that plays a core role in facilitating transactions and maintaining network functionality. This aligns it with assets like Bitcoin and Ethereum, which are used to secure and operate decentralized networks.

The classification emphasizes that such assets do not inherently provide rights to profits, income, or ownership in a business, which are key characteristics typically of securities.

Shift Away From the Howey Test Era

Notably, the SEC’s new approach marks a departure from its earlier heavy reliance on the SEC v. W. J. Howey Co., which had long been used to determine whether digital assets qualified as securities.

SEC Chair Paul Atkins stated that the updated framework provides “clear lines in clear terms,” stressing that most crypto assets are not securities.

The guidance also clarifies that activities such as staking, mining, and airdrops generally do not meet the definition of securities transactions.

CFTC Alignment Signals Broader Regulatory Clarity

Meanwhile, the Commodity Futures Trading Commission (CFTC) has indicated it will follow the SEC’s view on crypto, treating digital commodities under existing law. This shared approach is a big step toward clearer, more consistent rules in the U.S.

For XRP holders, the token’s official designation as a digital commodity marks a major milestone considering the five lawsuits that initially labeled it a security. With clearer rules, XRP could face fewer issues with exchange listings, institutional use, and wider adoption.

Overall, the SEC’s shift marks a key moment for the crypto market as regulators begin setting clearer definitions and boundaries.