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Is XRP a Security?
Last Updated: February 11, 2026
No, XRP, the native token of the XRP Ledger, is not classified as a security for purposes of exchange-based transactions. In July 2023, U.S. District Judge Analisa Torres ruled that programmatic sales of XRP on public exchanges do not constitute securities transactions under the Howey test. The court did find that Ripple's direct institutional sales had characteristics of securities offerings, but XRP itself — as a digital asset — was not deemed a security.
The Short Answer
The short answer is that XRP, the native token of the XRP Ledger, is not a security when bought and sold on public exchanges. This was established in the landmark SEC v. Ripple Labs case. Judge Torres applied the Howey test and determined that secondary market purchasers of XRP did not reasonably expect profits from Ripple's efforts — a key requirement for something to be classified as a security. This ruling was a watershed moment for the crypto industry, leading to XRP being relisted on major U.S. exchanges that had previously delisted it. By 2026, XRP enjoys clearer regulatory standing than most digital assets.
The Full Explanation
The SEC Lawsuit: Background
On December 22, 2020, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs, CEO Brad Garlinghouse, and co-founder Chris Larsen, alleging that XRP was an unregistered security and that Ripple had raised over $1.3 billion through illegal securities sales. The lawsuit sent shockwaves through the crypto industry, causing major exchanges like Coinbase and Binance US to delist or suspend XRP trading.
The Howey Test
The legal framework for determining whether something is a security in the U.S. comes from the 1946 Supreme Court case SEC v. W.J. Howey Co. Under the Howey test, an asset is a security if it involves: (1) an investment of money, (2) in a common enterprise, (3) with a reasonable expectation of profits, (4) derived from the efforts of others. The crux of the XRP case hinged on whether buyers of XRP on exchanges had a reasonable expectation of profits from Ripple's efforts.
The Ruling
On July 13, 2023, Judge Torres issued a partial summary judgment that made legal history. She drew a critical distinction: Ripple's direct sales to institutional investors (who knew they were buying from Ripple and expected profits from Ripple's efforts) did meet the Howey test criteria. However, programmatic sales on exchanges — where buyers didn't know whether they were buying from Ripple or any other seller — did not. XRP itself, as a digital token, was not inherently a security.
Impact on XRP and the Crypto Industry
The ruling had immediate and far-reaching consequences. XRP's price surged over 70% in the days following. Major exchanges relisted XRP. The decision established precedent that a digital asset can be sold as part of a securities transaction in one context but not in another — the asset itself is not a security. This nuance was novel and influential, being cited in subsequent crypto-related cases. By 2026, the SEC has moved toward a more structured regulatory framework, and XRP benefits from being one of the few major digital assets with clear legal precedent in its favor.
Global Regulatory Status
Outside the U.S., XRP, the native token of the XRP Ledger, has generally not been classified as a security. The UK's FCA, Japan's FSA, Singapore's MAS, and various other regulators have either explicitly or implicitly treated XRP as a utility token or virtual asset rather than a security. This global regulatory clarity further supports XRP's standing as a legitimate digital asset for payments and liquidity.
What This Means for You
For you, this means that buying, selling, and holding XRP, the native token of the XRP Ledger, on regulated exchanges is legal and does not involve purchasing a security. This regulatory clarity reduces risk for investors and opens the door to potential financial products like an XRP ETF. It also means that XRP can be used freely for payments, remittances, and institutional liquidity via RippleNet without the legal cloud that hung over it from 2020 to 2023.
Learn more about XRP's history and the full timeline of the SEC case.
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