Ripple requests the SEC to clarify when a token is no longer considered a security.

Ripple has just sent a response letter to the SEC's cryptocurrency task force, requesting the agency to clarify when a digital asset - initially sold as an investment contract - will no longer be considered a security.

The company cites the 2023 ruling by Judge Torres that XRP is not a security in the secondary market, although some institutional transactions are still considered securities.

Ripple also proposed a "mature" standard consisting of: a sufficiently large market value, an open operational network, and not being centrally controlled – to determine that a token has escaped from the initial investment contract.

The company criticized the SEC for lacking clear guidance and called on Congress to fill the legal gap. Ripple also supports a safe harbor mechanism for good faith projects, as long as it does not imply that tokens are automatically subject to securities regulation.