The conversation around XRP’s potential relisting on Coinbase has reignited, driven by recent legal commentary from key figures in the crypto space. As the long-running Ripple vs. SEC case continues to shape the regulatory landscape, a growing number of voices—including top legal executives at major exchanges—are weighing in on what defines a security in the digital asset world.
At the heart of this renewed momentum is a compelling legal argument made by John E. Deaton, attorney and advocate for XRP holders, and an unexpected endorsement from Paul Grewal, Chief Legal Officer (CLO) of Coinbase. His public agreement with Deaton’s interpretation of "investment contracts" has sparked fresh speculation: Could XRP finally return to one of the largest U.S. crypto exchanges?
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Why “Investment Contract” Matters
To understand why Grewal’s comments carry weight, it’s essential to grasp the legal foundation they’re built upon. The term “investment contract” is central to U.S. securities law and stems from the landmark 1946 Supreme Court case SEC v. W.J. Howey Co. Under the Howey Test, an investment contract exists when there is:
- An investment of money
- In a common enterprise
- With an expectation of profits derived from the efforts of others
This framework was designed decades before blockchain technology existed. Yet today, it remains the primary tool used by the SEC to determine whether a digital asset qualifies as a security.
John E. Deaton emphasizes that not all token sales are securities, especially those occurring on secondary markets. He argues that software code—like XRP—cannot inherently be classified as a security simply because it was once sold in a way that might meet the Howey criteria.
“Digital assets and software code by their nature are not listed in the 90-year-old law,” Deaton notes. “Therefore, in all of the SEC cases… the only relevant term is ‘investment contract.’”
In other words, even if Ripple conducted unregistered securities offerings during its initial distribution of XRP, that doesn’t automatically make every subsequent trade of XRP a securities transaction.
Coinbase’s Legal Stance Adds Fuel
Paul Grewal’s response to Deaton’s analysis was clear and direct:
“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 aligns Coinbase with Ripple’s broader legal position—that secondary market trading of established cryptocurrencies should not be treated as securities transactions. The exchange previously filed an amicus brief supporting Ripple, reinforcing its belief in clearer regulatory boundaries for digital assets.
While Grewal hasn’t officially called for XRP to be relisted, his agreement with Deaton signals a significant shift in institutional thinking. It suggests that Coinbase may already be laying the legal groundwork for future asset listings based on evolving interpretations of securities law.
Still, no immediate relisting has occurred. Grewal clarified in a recent interview that any decision would depend on two critical factors:
- The finality and reasoning behind the district court’s ruling
- Whether the appeals court is likely to uphold it
Given that both Ripple and the SEC are expected to appeal aspects of the case, Grewal believes a “thin win” for Ripple—where some claims are dismissed but others upheld—could create the most favorable conditions for reopening trading.
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Secondary Sales Aren’t Securities—A Growing Consensus?
One of Deaton’s most powerful points is historical precedent: there has never been a U.S. case where secondary sales of an asset were deemed securities transactions. Whether it’s stocks, real estate, or collectibles, once ownership changes hands independently of the original issuer, it falls outside securities regulation.
Applying this principle to crypto, Deaton argues that while early distributions (like ICOs) might qualify as investment contracts, ongoing peer-to-peer trading does not. He cites the SEC’s case against Telegram, where the court ruled that although Gram tokens were part of an unregistered offering, the tokens themselves were not securities once distributed.
Similarly, Ethereum (ETH) underwent scrutiny for its initial coin offering, yet ETH is widely traded without being classified as a security today.
“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.”
— John E. Deaton
This distinction is crucial. It separates the act of fundraising from the nature of the asset. If accepted broadly, it could pave the way for more digital assets to be treated as commodities rather than securities after their initial release.
FAQs: Addressing Common Questions About XRP and Coinbase
Q: Has Coinbase announced plans to relist XRP?
A: Not yet. While Paul Grewal agrees with legal arguments favoring XRP’s non-security status, Coinbase has not confirmed any timeline or intention to relist the token.
Q: What does “secondary sale” mean in crypto?
A: A secondary sale refers to trading between individuals or on exchanges after the initial distribution by the project team. These transactions typically don’t involve the issuing company and are common across all markets.
Q: Why didn’t Coinbase relist XRP after Ripple’s partial victory?
A: Regulatory uncertainty remains high. With potential appeals from both sides, exchanges like Coinbase often wait for final, enforceable rulings before making listing decisions.
Q: Is XRP considered a security?
A: In July 2023, a U.S. district court ruled that XRP is not a security when sold on public exchanges (i.e., in secondary markets). However, institutional sales directly from Ripple were found to be unregistered securities offerings.
Q: How could Grewal’s comments impact other altcoins?
A: His stance supports a broader principle: most mature cryptocurrencies traded on secondary markets shouldn’t be regulated as securities. This could benefit many projects facing similar scrutiny.
Q: What’s the current price of XRP?
A: At the time of writing, XRP was trading around $0.5137, showing signs of consolidation following recent gains.
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Final Thoughts: A Shift in Institutional Sentiment
While the relisting of XRP on Coinbase isn’t imminent, the growing alignment between community advocates and corporate legal teams marks a turning point. The debate is no longer just about one token—it’s about defining the future of digital asset regulation in America.
As exchanges like Coinbase adopt more nuanced legal positions, they’re helping shape a framework where innovation can thrive without compromising investor protection.
For now, investors should remain patient but optimistic. Regulatory clarity doesn’t come overnight—but with every tweet, court filing, and public statement from figures like Grewal and Deaton, we move closer to a more transparent and inclusive crypto ecosystem.
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