The conversation around relisting XRP on Coinbase has surged once more, reigniting interest across the crypto community. This renewed momentum stems not from market speculation, but from high-level legal discourse that could shape the future of digital asset regulation in the United States.
At the heart of this resurgence is a growing alignment between key legal voices in the industry—particularly John E. Deaton, attorney for the XRP community, and Paul Grewal, Chief Legal Officer (CLO) of Coinbase. Their shared interpretation of what constitutes an "investment contract" under U.S. securities law has become a pivotal point in the ongoing Ripple vs. SEC case—and a beacon of hope for XRP holders.
Why “Investment Contract” Matters
Understanding the term "investment contract" is essential to grasping why XRP’s regulatory status may be shifting. According to John E. Deaton, this phrase is one of the most misused and misunderstood terms in crypto-related legal discussions online.
An investment contract is a specific legal construct established by the U.S. Supreme Court in the 1946 SEC v. W.J. Howey Co. case. It defines a security as an investment of money in a common enterprise with an expectation of profit derived from the efforts of others.
Crucially, Congress did not originally include digital assets or software code in the 1933 Securities Act—meaning that for cryptocurrencies like XRP, the only applicable classification hinges on whether they meet the Howey test as an investment contract.
Deaton emphasizes that digital assets themselves—being software code—are not inherently securities. Even if an initial distribution (like an ICO) involved unregistered securities offerings, that does not automatically classify the underlying asset as a security in perpetuity.
“The ETH ICO constituted an unregistered securities offering. Ripple may have offered or sold XRP as an unregistered security on a specific occasion(s). But even if true, it doesn’t make the underlying asset – digital code – a security itself,” Deaton stated.
This distinction is critical: while early sales might fall under securities laws, secondary market transactions do not—especially when buyers are not relying on third-party efforts for profit.
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Coinbase CLO Backs Ripple’s Legal Stance
Paul Grewal, Coinbase’s Chief Legal Officer, has publicly supported Deaton’s interpretation. In a recent Twitter exchange, Grewal affirmed:
“Mr. Deaton is exactly right. ‘Investment contracts’ must include both ‘investment’ and ‘contracts’ as those terms are set out by Congress and interpreted by the Supreme Court. Neither is present when it comes to secondary sales of digital assets.”
This statement carries significant weight. Coinbase previously filed an amicus brief in support of Ripple during its legal battle with the SEC, signaling institutional backing for clearer regulatory boundaries.
Grewal’s position reinforces a growing consensus among legal experts: once a digital asset enters the secondary market without promises of future development or profit from a central entity, it no longer meets the Howey criteria.
This principle has historical precedent. As Deaton notes, there has never been a U.S. case where secondary sales of any asset were classified as securities transactions. If applied consistently, this precedent would protect decentralized markets and empower exchanges to list mature digital assets without undue regulatory fear.
What This Means for XRP on Coinbase
Despite Grewal’s clear legal stance, Coinbase has not yet relisted XRP. The exchange remains cautious, awaiting further clarity—particularly regarding potential appeals in the Ripple-SEC case.
In a recent interview, Grewal explained that relisting decisions depend on multiple factors:
- The legal rationale behind the district court’s ruling
- Coinbase’s internal assessment of whether the appellate court will uphold it
- The likelihood of prolonged litigation
Given these uncertainties, Grewal suggested that a “thin win” for Ripple—a narrow legal victory acknowledging partial liability but affirming XRP’s non-security status in secondary markets—could be the optimal outcome for investors.
Such a ruling would provide enough regulatory breathing room for exchanges like Coinbase to confidently relist XRP without facing enforcement risks.
Market Reaction and Investor Sentiment
The legal debate hasn’t gone unnoticed by traders. At the time of writing, XRP was trading at $0.5137, showing signs of consolidation after a strong upward movement the previous week.
More telling than price alone is the surge in social sentiment. The hashtag #RelistXRP trended again on Twitter following Grewal’s comments, reflecting renewed community optimism.
This isn’t just about listing access—it’s about recognition. For millions of XRP holders, a relisting on Coinbase would symbolize broader acceptance of XRP as a legitimate digital asset operating outside traditional securities frameworks.
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Frequently Asked Questions (FAQ)
Q: Why hasn’t Coinbase relisted XRP yet?
A: While Coinbase supports Ripple’s legal arguments, the exchange is waiting for greater regulatory certainty—especially concerning potential appeals in the SEC case. A final, upheld ruling would reduce compliance risk.
Q: Does selling XRP count as selling a security?
A: According to legal experts like John E. Deaton and Paul Grewal, secondary market sales of XRP do not meet the Howey test for investment contracts and therefore are not securities transactions.
Q: Was XRP ever a security?
A: The court ruled that Ripple’s institutional sales of XRP were unregistered securities offerings. However, programmatic sales (to retail via exchanges) were not. This distinction supports the idea that XRP itself isn’t inherently a security.
Q: Could other altcoins benefit from this legal reasoning?
A: Yes. If courts accept that digital assets cease being securities after initial distribution, it could set a precedent benefiting many established cryptocurrencies like ETH, ADA, and SOL.
Q: What is an amicus brief?
A: An amicus brief (“friend of the court”) is a legal document filed by a third party to provide additional perspective or expertise. Coinbase filed one supporting Ripple’s position on digital asset classification.
Q: Is XRP fully cleared by the SEC?
A: Not yet. The litigation is ongoing, with possible appeals expected. Full resolution may take months or even years.
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Final Outlook: A Turning Point for Crypto Regulation?
The dialogue between Deaton and Grewal represents more than just legal nuance—it reflects a broader shift toward rational, precedent-based regulation of digital assets.
As exchanges demand clearer guidelines and investors seek transparency, cases like Ripple vs. SEC serve as critical tests for how U.S. law adapts to innovation.
If courts continue to distinguish between initial fundraising mechanisms and mature digital assets, we may see:
- Broader relistings of previously delisted tokens
- Increased confidence among institutional investors
- Faster adoption of blockchain technology across financial systems
For now, all eyes remain on Washington—and on Coinbase’s next move.
The relisting of XRP may still be pending, but the legal foundation supporting it grows stronger every day.