Bitcoin passed the test. Ethereum passed the test. Now, it is XRP’s turn. At the time of this writing, the SEC has the opportunity, through common law, to determine how to regulate the unregulated cryptocurrency world. This is a unique moment because guidance on SEC violations is usually promulgated through statutes, no-action letters, and quotes from SEC Commissioners, rather than common law. Therefore, the decision in SEC v. Ripple will pivot the direction on how cryptocurrencies and digital assets forever be used. Will this pivot be a “hard” or “soft” fork in how we use cryptocurrencies?

This Case Note argues that XRP is not a security (investment contract) under the Howey test. The test consists of three elements (1) an investment of money (2) in a common enterprise and (3) with the expectation of profits derived from efforts of others. XRP does not satisfy all three factors. Although seemingly controversial, this Case Note explains why XRP is not an investment contract but, rather, a universal currency, allowing users to change payments instantly and cheaply into their local currency. It concludes by discussing an alternative classification for XRP created by the SEC.