XRP Officially Classified as Digital Commodity by US SEC

The US Securities and Exchange Commission (SEC) has taken a significant step in providing regulatory clarity for the cryptocurrency market by officially classifying XRP as a digital commodity. This classification confirms that XRP is not a security under federal law, aligning it with major crypto assets like Bitcoin and Ethereum.

As part of its new framework, the SEC divides crypto assets into five categories: digital commodities, digital collectibles, stablecoins, digital tools, and digital securities. Digital commodities derive their value from the programmatic operation of a functional crypto system, rather than from managerial efforts of a central entity. XRP's classification as a digital commodity emphasizes its core role in facilitating transactions and maintaining network functionality.

The SEC's new approach marks a departure from its earlier reliance on the SEC v. W. J. Howey Co., which had long been used to determine whether digital assets qualified as securities. The updated framework provides clear lines in terms of what constitutes a security, clarifying that activities such as staking, mining, and airdrops generally do not meet the definition of securities transactions.

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 US, which could ease adoption and exchange listings for XRP.