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Wow. A federal judge finally handed down a decision in SEC v. Ripple, and it was a bombshell. Most legal observers—even in the crypto world—predicted the company would lose, and that the court would declare that the XRP tokens it sold were unregistered securities. That’s not how it turned out.

On Thursday, a federal judge ruled the Securities and Exchange Commission had gotten it wrong, and that “the vast majority of individuals who purchased XRP from digital asset exchanges did not invest their money in Ripple at all.” The effect on the crypto markets was electric.

As of Friday morning, the price of XRP tokens is up 65% and other popular tokens that have been in the SEC’s crosshairs—including Solana and Cardano—are up more than 25%. Meanwhile, shares of Coinbase, which is also being sued by the agency, shot north of $100 in the wake of the court’s ruling.

Against all odds, crypto has come storming back. After a year of massive scandals, an unprecedented regulatory onslaught, and widespread disillusionment, the industry has caught a break it desperately needed to get back on its feet. Meanwhile, its chief tormentor, SEC Chair Gary Gensler, is on the back foot after the court agreed with the crypto world that he had overstepped his jurisdiction.

The question is what happens next. For now, the legal dust is still settling—the decision was not a clean win for Ripple as the judge found that, in the case of hedge funds and other big investors, the company’s XRP sales did amount to peddling unregistered securities. The distinction has some lawyers scratching their heads, and it’s possible the SEC will go scorched earth against Ripple to punish it for those institutional sales.

But even if Gensler does double down on pursuing Ripple—or simply appeals the ruling—the horse is out of the barn. Exchanges like Coinbase and Kraken have already added XRP back to their platforms, and, based on the judge’s reasoning, retail sales of tokens like Solana don’t count as securities offerings. For the foreseeable future, this is how it’s going to be.

I spoke with Coinbase’s top lawyer, Paul Grewal, who said the ruling lifts the sword of Damocles that has been hanging over his company’s head since the SEC sued it, but added that Gensler is unlikely to veer from his increasingly fanatical enforcement approach. Grewal predicts that the ruling, which implies the SEC and other agencies lack jurisdiction over a big swath of the crypto markets, will at last force Congress to clean up Gensler’s legal mess.

We shall see. Right now, it’s enough to say, in the words of the Crypto Council’s Sheila Warren, that the “regulatory permafrost” is finally thawing, and that the industry will end the week in a very different environment from where it began.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

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