A US Supreme Court case has caught the interest of the crypto community, especially the XRP community, as it could significantly impact Ripple’s ongoing legal battle against the US Securities and Exchange Commission (SEC). The US Supreme Court is set to decide on whether or not to overrule the Chevron Deference Doctrine in the ongoing case of Loper Bright Enterprises v. Raimondo.
How The Chevron Deference Doctrine Affects Ripple’s Case
The doctrine provides that courts, in the case of ambiguity, could adopt a federal agency’s interpretation of a statute as far as it sounds plausible. This doctrine was formulated in 1984 in the case of Chevron U.S.A. v. Natural Resources Defense Council when the court reasoned that these agencies, as experts, were in a better position than the court to demystify these statutes delegated to them by Congress.
As such, it is understandable why the Supreme Court’s ruling in the present Loper case is of interest to the XRP community, as the decision could determine what position the court will choose to adopt when the SEC’s case against Ripple goes to trial.
If the Chevron doctrine is overruled, the court in Ripple’s case isn’t compelled to consider the SEC’s interpretation of the Securities Act and how Ripple violated it through their XRP sales. However, suppose the Supreme Court decides to affirm the doctrine, the Judge in the case will likely have to be guided by the SEC’s interpretation, especially on areas it needs clarity.
The SEC has continued to allege that all of Ripple’s XRP sales (including programmatic sales and other distributions) constituted investment contracts under the Securities Act, thereby making the XRP token a security. As such, it believes that Ripple violated the law when it failed to register XRP as a security before offering it to the public.
Many, including Ripple’s Chief Legal Officer Stuart Alderoty, have welcomed this development in the hopes that the Supreme Court will curb the excesses of these federal agencies, including the SEC.
For The Broader Crypto Industry
The Supreme Court’s ruling in the Loper case will also undoubtedly affect the crypto industry, especially concerning the SEC’s continued enforcement action against the industry. Amid the lack of crypto-related laws, the SEC has swooped in and found a way to apply the Securities Act to the crypto industry.
Specifically, the SEC has continued to clamp down on crypto exchanges, alleging that they have violated the law by operating as an unregistered securities exchange. However, there is a general belief that this shouldn’t be so, as cryptocurrencies do not pass the Howey Test used to determine what can be considered security.
This belief, alongside Judge Analisa Torres’ ruling, forms part of Coinbase’s argument in its motion to dismiss the SEC’s lawsuit against it. The crypto exchange argues that the SEC is acting outside its jurisdiction by bringing such an action as the exchange doesn’t offer securities.
