The US Securities and Exchange Commission (SEC) is once again in conflict with Ripple. In addition to the ongoing lawsuit, the government agency announced that Ripple’s new, unlaunched stablecoin will be classified as an “unregistered crypto asset.”

Such a classification means that the crypto asset does not meet the regulatory requirements that generally apply to financial assets. Registration with a regulatory body aims to protect investors by ensuring transparency. Registered assets must also meet specific reporting and disclosure requirements.

In April, Ripple announced its plans to launch a stablecoin, positioning the company within the growing stablecoin market, where major players like Tether (USDT) and USD Coin (USDC) dominate.

The introduction of Ripple’s stablecoin responds to increasing demand in the decentralized finance (DeFi) sector, where stablecoins play a crucial role in liquidity management and payment processing. The digital currency is scheduled to launch later this year, initially in the United States (US), with expansion plans to Europe and Asia.

SEC demands stop on sales

The SEC has been critical of Ripple for a long time. The government agency claims that Ripple has been involved in selling XRP as an unregistered security since 2013. Additionally, the SEC states that Judge Analisa Torres has ruled that sales of XRP to institutional clients between 2013 and 2020 can be considered investment contracts.

The SEC is asking Judge Torres to impose a permanent ban on future sales of XRP related to Ripple’s On-Demand Liquidity (ODL) service to prevent further violations of federal securities laws. Despite such a ban, Ripple would still be able to offer ODL services in the United States, but using their upcoming stablecoin instead of XRP for transactions.

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