XRP and Ripple dossier.

The XRP Ledger is a blockchain that does not run on traditional mining or large-scale proof-of-stake, but on a consensus mechanism in which a group of trusted validators agrees on the order of transactions. That makes settlement fast, typically within a few seconds, and transaction costs remain structurally low.

XRP, the native currency of this network, is designed to serve as a bridge asset: a party wanting to exchange two currencies without direct liquidity existing between that currency pair can use XRP as an intermediate step. In theory that makes cross-border transfers faster and cheaper than through traditional correspondent banking relationships.

A large portion of the total XRP supply had already been created at launch and was partly allocated to Ripple Labs, distinguishing the currency from networks such as Bitcoin where new coins are gradually created through mining. This centralised issuance history remains a recurring point of debate within the broader sector.

Ripple Labs is the company that builds software and services around the XRP Ledger, aimed at banks and payment service providers that want to settle cross-border transfers faster and more cheaply. Its best-known product is On-Demand Liquidity, in which XRP is used to temporarily supply liquidity without an institution having to hold large amounts of the target currency in advance.

Traditional cross-border payments often run through a chain of correspondent banks, where each link adds time and cost and requires pre-funded working capital in multiple currencies. Ripple's approach tries to shorten that chain by using XRP as an intermediate step, which can reduce the required working capital.

The company works with financial institutions in multiple regions, with a growing presence in markets where cross-border payments run relatively slowly or expensively through existing banking infrastructure. The extent to which banks actually hold XRP themselves versus merely using Ripple's software layer varies widely per partnership.

In late 2020, US securities regulator the SEC sued Ripple Labs and two executives, with the core allegation that the sale of XRP over the years amounted to the offering of an unregistered security. Under US law, the so-called Howey test determines whether an asset must be classified as an investment contract and thus as a security.

The case affected not just Ripple itself but the broader crypto sector, because a ruling against Ripple could have had consequences for the classification of countless other tokens issued through similar mechanisms. Several US exchanges temporarily delisted XRP during the uncertainty.

Ripple argued that XRP as such is not an investment contract, since buyers on the open market do not enter into a direct contractual relationship with Ripple and do not necessarily share a common enterprise with the company as the Howey test requires.

In July 2023, Judge Analisa Torres ruled that programmatic sales of XRP through exchanges to the general public were not securities transactions, because buyers at that time had no knowledge of who they were buying from and thus could not hold direct expectations based on Ripple's efforts. Institutional sales made directly to sophisticated parties were, however, classified as securities transactions, since there direct contractual arrangements and marketing communication about the company's future efforts were present.

This split ruling was interpreted by parts of the sector as a partial victory for Ripple and as a signal that secondary market sales of tokens do not automatically qualify as securities transactions. The SEC appealed certain parts, and Ripple also filed a cross-appeal against the institutional component of the ruling.

In March 2025, both parties dropped their appeals, effectively closing the core of the years-long case. That gave market participants more clarity, although the precise scope of the ruling remains limited to the specific facts of this case and does not constitute formal legislation automatically applying to all tokens.

The outcome of the Ripple case was closely watched by lawyers in the sector because it could shape how US regulators view the sale of tokens through exchanges. At the same time, legal commentators emphasise that the ruling is tailored to the specific facts of XRP and cannot simply be applied one-to-one to other tokens.

For US exchanges, the partial clarity meant that some previously delisted XRP listings were restored, and it gave a cautious signal that further enforcement actions against similar tokens would be weighed more carefully. Still, debate continued about the treatment of other tokens that do not share exactly the same sales history.

In the European Union, the classification of crypto assets has, since the introduction of the MiCA regulation, been built on a different foundation than in the United States. MiCA has its own categories for tokens and focuses mainly on licensing requirements for issuers and service providers, rather than on whether a token qualifies as a security under a test such as Howey.

For European users and businesses working with XRP or Ripple's services, this means that the American lawsuit influenced sentiment and availability on US platforms, but does not directly determine how XRP is treated within the EU. European crypto service providers offering XRP must nonetheless comply with the licensing and transparency requirements MiCA imposes on them.

A number of European banks and payment service providers have trials or partnerships involving Ripple's technology, mainly aimed at speeding up payments to regions where correspondent banking relationships are traditionally slow or costly. The scale of these partnerships varies and is generally not disclosed in detail by the institutions involved.