XRP’s ’Legal Clarity’ Has a Catch – Banks Still Fear Torres’ Institutional-Sales Label

That regulatory green light for XRP? Turns out it's flashing amber for big finance.

Judge Torres' landmark ruling carved a distinction between retail and institutional sales—and that second category is still giving compliance officers cold sweats. Banks aren't rushing to integrate an asset where corporate deals might suddenly be deemed securities transactions. The 'clarity' everyone cheered has a legal asterisk the size of a blockchain.

The Institutional Stigma

Forget retail trading. The real money—the institutional flows—remains stuck in legal limbo. Torres' framework means every large-scale OTC desk or treasury purchase requires a legal review banks would rather avoid. Why navigate a minefield when you can just… not? It's the financial equivalent of seeing a 'Wet Floor' sign and taking a different hallway entirely.

A Chilling Effect on Adoption

This creates a bizarre split-market: XRP is legally clear for your average investor, but potentially radioactive for the very institutions that could bring mainstream liquidity. The tech works. The use-case is proven. But the legal overhang on bulk transactions acts like a throttling mechanism on institutional adoption. Progress, but with handcuffs on.

The bottom line? A partial win in court doesn't automatically unlock vaults on Wall Street. Until regulators explicitly bless institutional dealings, XRP's 'clarity' remains a retail-only phenomenon—and in finance, if it doesn't work for the suits, it barely works at all. Typical: lawyers create a solution so nuanced it becomes the next problem.

Despite the “legal clarity” celebrated in August, institutional conviction appears fractured. While Bitwise and WisdomTree updated their S-1 filings in October—pushing approval odds to a near-certain 95%—institutionalsince the settlement.

The Evidence

The August 2025 Joint Stipulation finalized afor historical institutional sales. Additionally, the SEC dropped its appeals, cementing the 2023 summary judgment that public sales are not securities.

• ETF Flows: Grayscale’s conversion filing for GXRP (Nov 2025), And Bitwise’s Amendment No. 4 indicates imminent approval.
• Direct Flows: On-chain data flags a $405,000 net outflow from institutional wallets in the last 24 hours alone.

Reaction & Outlook

The new SEC Chair’s “Project Crypto” initiative has deprioritized enforcement, but banks remain paralyzed by the specific wording of Judge Torres’ ruling: direct sales to institutions are securities.

BREAKING:

SEC LAUNCHES PROJECT CRYPTO TO MOVE ALL MARKETS ONCHAIN. pic.twitter.com/BNRqB2M6hE

The market is pricing in a spot ETF approval by. Until then, liquidity remains thin.

The Institutional Take

Don’t misread the futures collapse as bearishness; it is a. The Torres ruling created a toxic asset class for U.S. banks: holding XRP directly on a balance sheet still carries “institutional sales” stigma.

The ETF is the loophole. It wraps the “dirty” underlying asset in a “clean” securities structure (19b-4). Smart money is dumping the token to front-run the ETF, effectively swapping compliance risk for a 34bps management fee. Expect OI to remain dead until the ETF goes live.