"One small step for Ripple, one giant leap for crypto in the U.S.," was the quote du jour in crypto circles yesterday, Crystal writes.

Why it matters: It may not ultimately be the moon landing of regulatory breakthroughs, but yesterday's Ripple ruling did knock down the SEC theory plaguing the entire industry — that all crypto tokens are securities.

Driving the news: The court yesterday ruled that Ripple's XRP token when sold through institutional contracts should be considered securities, but that XRP sold through "programmatic sales" on crypto exchanges, should not.

Zoom out: If crypto tokens themselves aren't always securities, then that cripples the SEC's stance that operators of token marketplaces are inherently in violation of federal securities laws.

• Or at least that's the industry logic. The stock of the U.S.'s largest crypto exchange shot up over 32% yesterday after the decision.
• Ripple's win is being cheered as a win for everyone else.

The intrigue: As the judge was ruling on Ripple yesterday, that exchange, Coinbase, was defending itself just down the hall in another New York courtroom from its own SEC lawsuit.

• Steven Peikin, Coinbase legal counsel and former co-director of the SEC's enforcement division, said little over the two-hour conference but did reference a five-year-old speech from then-SEC director William Hinman.
• That was one of Ripple's defenses too.

Flashback: Hinman, at the time the director of the SEC's division of corporation finance, said in a 2018 speech that tokens could effectively stop being securities once they became decentralized enough.

• Resulting internal SEC communications, made public last month via Ripple legal proceedings, show that agency officials at the time expressed concerns about the clarity of digital assets policy messaging.

Be smart: That could end up being useful to Coinbase's "fair notice" defense in its own case with the SEC because Hinman's speech rubs up against what SEC chair Gary Gensler has been saying.

• If the SEC's own theories about what makes tokens securities don't align, how could crypto firms possibly know?

Zoom out: The XRP token, and whether it is considered a security, was at the heart of the SEC lawsuit against San Francisco-based Ripple Labs.

• Exchanges, including Coinbase, moved quickly yesterday to begin re-listing XRP following the news (U.S. exchanges had suspended trading when the trial began).

XRP soared on the Ripple ruling, with prices zooming up 70%+ yesterday and still hanging onto much of those gains as of Friday afternoon, Crystal writes.

Between the lines: The market sees a win.

What we're watching: Coinbase, Kraken and other platforms re-listing XRP.

• Of course, an appeal is likely.

Both chambers of the U.S. Congress are looking at settling the question of the legal status of cryptocurrencies in law instead of courts, Brady writes.

Why it matters: The industry has been begging lawmakers for years for updated rules that will allow decentralized assets to trade and be used by larger numbers of people.

Driving the news: Sens. Cynthia Lummis (R, Wyo.) and Kirsten Gillibrand (D, NY) have put out a new version of their comprehensive legislation from 2022 on regulating digital assets, titled the Responsible Financial Innovation Act.

• A plain English summary of the legislation is available.
• The update follows draft legislation in the House that surfaced last month and addresses a similar open question.

The intrigue: The Ripple ruling seemed to have rippled through Washington as well.

• "The decision confirms the need for Congress to deliver a clear regulatory structure for the crypto asset industry that provides the highest level of consumer protection," Lummis told Axios last night, via a spokesperson.
• What we're watching: The political calculus around the need to define which assets qualify for the agency's supervision may have shifted.

How it works: A draft summary of the legislation provided by Lummis' office describes how the distinctions between commodities and securities will be made.

• Under the proposal, assets that don't represent debt or equity but are stewarded by a company or management team to a degree where the decentralization is in question would be categorized as "ancillary assets."
• While such assets would be treated as commodities, they would need to provide certain disclosures to the SEC on a regular basis.

Zoom out: The Lummis-Gillibrand bill aims to be fairly comprehensive.

• It seeks to address many other open questions in the space, such as: consumer protection, the nature of stablecoin issuers, rules around accounting for customer assets, and updates to the way firms in crypto pay taxes on their holdings.

Go deeper.

🕊️ Celsius CEO Alex Mashinsky got a deal for release under a $40 million bond, with travel restricted to New York. (Decrypt)

🍊 Speaking of spot bitcoin ETFs, Europe approved one in 2021 that hasn't traded yet, but it could happen any day. (Bitcoin Magazine)

🇨🇳 The beleaguered Multichain team confirmed that Chinese authorities have detained the company's CEO and his sister. (CoinDesk)

📌 Bluechip, a nonprofit created by the founder of MakerDAO to grade the safety of stablecoins, has launched and awarded letter grades to 15 tokens so far. (The Block)

If you spend a couple years following crypto, you will be subjected to so many discourses on the Howey test that it's hard to fault people for starting to feel like they are experts on it, Brady writes.

• There's lots of armchair attorneys out there.

Driving the news: As we wrote above, yesterday a court found that XRP — the cryptocurrency created by Ripple Labs — is not necessarily a security when traded on secondary markets.

• After the ruling, I did a search for "XRP is obviously a security" on Twitter and found lots of results, many going back to 2018, including this one by investor and podcaster, Jason Calancis (recently famous amid the Silicon Valley Bank meltdown).

For those outside of crypto, it's helpful to know that XRP, while a top-10 cryptocurrency, is not very popular with folks who favor assets like bitcoin and ether.

• It has, however, a horde of vociferous (largely anonymous) fans who defend it online, the XRP army — which is so aggressive it tends to make the asset even less popular with non-fans.

With a court now saying it's not so simple, a lot of armchair lawyers look a little silly. An attorney at the crypto firm Paradigm, Justin Slaughter, did a helpful thread on the ruling, illuminating how fiddly the facts and circumstances of a given case can be.

• In Slaughter's read, the judge found it particularly important that buyers on the secondary market didn't know who they were buying from (so they didn't necessarily know they were giving money to Ripple Labs).