Ripple Urges SEC to Move Beyond “Decentralization” in Crypto Regulation
On January 9, 2026, Ripple submitted a formal letter to the SEC Crypto Task Force advocating for a fundamental shift in how digital assets are regulated.
Well, the company is pushing regulators to move beyond the increasingly criticized “decentralization” test and instead focus on enforceable rights and obligations to determine whether a crypto asset should fall under securities law.
Ripple argues that “decentralization” is an inherently subjective and fluid concept, influenced by factors such as code contributions, node distribution, economic incentives, and governance participation. Because decentralization exists on a continuum rather than as a binary state, relying on it as a legal metric creates uncertainty, legal risk, and inconsistent outcomes.
According to Ripple, this approach can lead to both “false negatives,” where assets that should be regulated avoid oversight by appearing diffuse, and “false positives,” where market-proven assets remain trapped in securities regulations due to ongoing participation by developers or holders.
Why does this matter? Well, Ripple’s letter urges regulators to separate the security offering from the asset itself. Once the original contractual obligations end, secondary market trades should no longer be treated as securities.
Ripple acknowledges that privity, the legal link between issuer and initial investor, matters only in primary sales, not in mature markets. This approach mirrors SEC Chair Mark Atkins’ view that obligations tied to an offering naturally expire over time.
Therefore, Ripple’s submission urges clear, practical crypto regulations, championing a rights-based framework that separates assets from their original offerings.
By pushing for legal certainty, Ripple is shaping a path for responsible innovation and broader institutional adoption, guiding the SEC toward rules that reflect the realities of digital assets in 2026 and beyond.
Conclusion
Ripple is calling for a shift from subjective decentralization tests to a clear, rights-based regulatory framework, setting a precedent for the entire crypto industry.
By emphasizing enforceable obligations, privity, and the natural expiration of contractual promises, Ripple advocates for rules that deliver certainty, protect investors, and let digital assets thrive without regulatory overreach.
Notably, Ripple’s approach provides a practical blueprint for distinguishing between assets and offerings, paving the way for a transparent, efficient, and innovation-friendly market.
