The crypto industry celebrated Ripple's partial win in court on Thursday, as a judge has ruled XRP (XRPUSD) is not a security. While many crypto proponents see this as a sign these sorts of assets will be allowed to flourish in the U.S., some legal experts point out that there is still much more regulatory clarity needed.

What Does the XRP Ruling Mean for Crypto Assets?

Bitcoin is a commodity, and that brings clarity on how it is regulated and by which agency. But that is not the case for most cryptocurrencies.

The U.S. Securities and Exchange Commission (SEC) contends that most cryptocurrency assets are securities and therefore must fall under the purview of securities laws. To that effect, the regulator has brought enforcement actions against issuers of the crypto tokens and as well as crypto exchanges such as Binance and Coinbase (COIN) that provided a platform to trade those tokens.

With the latest court ruling that XRP is not an investment contract itself, some members of the crypto industry are hopeful that the SEC will be forced to take a more hands off approach going forward. In addition to XRP, a number of other crypto assets that had previously been deemed securities, such as Solana (SOLUSD) and Polygon (MATIC), rallied on the news of the Ripple court order.

According to Morrison Cohen Partner Jason Gottlieb, Thursday's ruling is a departure from what had previously been found in the SEC's cases against Telegram and Kik, where all initial coin offerings were part of one investment scheme. Now, it's possible that crypto assets could be traded as "unrestricted securities" in a situation where they are sufficiently decentralized or not sold directly to retail. Gottlieb also says it would be difficult to conclude that staking rewards are securities in the context of the Ripple ruling.

"All in all, while lots of thorny questions remain, the initial jubilation over the decision is justified," said Gottlieb. "This new judicial guidance is a boon to token creators and markets, giving them new non-violative ways to issue and trade tokens."

Implications for SEC Cases Against Binance and Coinbase

In addition to offering more clarity for crypto token issuers, Thursday's Ripple court order also opens up more flexibility in terms of what can be listed on exchanges, at least in the eyes of those operating the exchanges.

The XRP token "is not in and of itself a “contract, transaction[,] or scheme” that embodies the Howey requirements of an investment contract," a federal judge ruled Thursday. The order also said that XRP sold to institutional investors broke securities laws while XRP traded on exchanges by retail investors did not.

That could have some implications for the lawsuits the SEC has filed against Binance and Coinbase, which were both sued for operating unlicensed securities exchanges.

Coinbase Chief Legal Officer Paul Grewal told CNBC that the crypto exchange's legal standing has been improved by the court order in the Ripple case. "I thought we would win before this decision," said Grewal. "We think this decision has only further strengthened the case."

In an episode of The Chopping Block, Brown Rudnick Partner Stephen Palley brought up the question of whether the SEC may go after the crypto exchanges that have now decided to relist XRP. "If so, the exchanges are willing to fight," Palley said.

Palley added that he's confident Coinbase would be raising this new legal opinion in their case against the SEC to illustrate that the transactions that occur on their platform are not securities transactions. "The most important sign, at least short term, is that Coinbase and Kraken have relisted [XRP]," Palley added. "That, obviously, means something."

This is Not a Final Decision

While the crypto industry can take the Ripple court order as a win for now, the reality is this ruling may not end up being the final say on the matter for two key reasons.

For one, the SEC still has the ability to appeal the decision made by the judge in the Ripple case. Secondly, the final word on crypto assets' regulatory classification may come from Congress by way of new legislation, as SEC Commissioner Hester Peirce has been advocating.

In his own post on the matter, Brown Rudnick Partner Preston Byrne shared his belief that the SEC is likely to appeal this decision and see the ruling overturned. Gottlieb also added his own caveat that this is simply one decision from one district court that other courts could adopt or not follow.

Specifically, Byrne says the court made an error when it concluded "programmatic" sales of XRP on exchanges were not investment contracts. In his view, it's "obvious to anyone active in the industry" that Ripple is the principal promoter of XRP, no matter whether the purchasers of the digital asset on exchanges were aware they were purchasing from Ripple.

"My hope is that Congress will get its act together and decide that it’s time for cryptocurrency tokens and cryptocurrency exchanges to receive their own purpose-built disclosure and supervisory frameworks which will take cryptocurrency regulation out of the slow and contradictory hands of our courts, and the politically motivated hands of the SEC," wrote Byrne. "My expectations of Congress are, however, quite low."