[detroitcoder]

I had a similar thought at first but then read the actual ruling and it made more sense and it all stems on the 3rd prong of the Howie Test. It states there needs to be a "reasonable expectation of profits derived from the managerial efforts of others" which a share of stock has via dividends, etc. regardless how it was acquired.

For XRP, there is no explicit rights to profits via the efforts of others via the instrument so you then have to look at the agreement made via the contract between the purchaser and the issuer.

On page 18 of the ruling it outlines this for Institutional Investors:

'''The third prong of Howey examines whether the economic reality surrounding Ripple’s Institutional Sales led the Institutional Buyers to have “a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.”... Based on the totality of circumstances, the Court finds that reasonable investors, situated in the position of the Institutional Buyers, would have purchased XRP with the expectation that they would derive profits from Ripple’s efforts. '''

However for "Programmatic Buyers" on exchange the ruling said:

'''Having considered the economic reality of the Programmatic Sales, the Court concludes that the undisputed record does not establish the third Howey prong. Whereas the Institutional Buyers reasonably expected that Ripple would use the capital it received from its sales to improve the XRP ecosystem and thereby increase the price of XRP, Programmatic Buyers could not reasonably expect the same.'''

So because there is both no expectation of profits tied to the managerial efforts of others, nor from the contract made by a buyer on exchange, the court ruled the 3rd prong does not apply. Stocks fail the first part of this.

[trog]

> '''Having considered the economic reality of the Programmatic Sales, the Court concludes that the undisputed record does not establish the third Howey prong. Whereas the Institutional Buyers reasonably expected that Ripple would use the capital it received from its sales to improve the XRP ecosystem and thereby increase the price of XRP, Programmatic Buyers could not reasonably expect the same.'''

I don't get this - why were Programmatic Buyers buying it then? I would agree if Programmatic Buyers were buying XRP to immediately use to then buy pizza or whatever, but nobody in cryptoassets does this.

Every individual person buying XRP seems to me to be buying it for the same reason as the institutional investors.

[peyton]

Different counterparties. If I buy XRP from you, it’s absurd for me to believe Ripple will use the money I just gave you to improve the XRP ecosystem.