Deaton emphasizes the importance of the Torres Doctrine in the Ripple vs SEC case.

In a groundbreaking legal ruling, Judge Torres has established what is now known as the “Torres Doctrine.” This doctrine applies the 1946 Howey Test to the modern-day use of blockchain technology, as seen in the Ripple case. The decision has been met with approval from lawyers in the cryptocurrency industry, particularly John E Deaton, the founder of Crypto Law US.

The Torres Doctrine has garnered attention and praise due to its interpretation and application of the classic Howey Test to the complexities of blockchain technology. The Howey Test, established in 1946, is the standard method used in US law to determine whether certain transactions qualify as “investment contracts.” Judge Torres applied the test rigorously to each type of XRP sale that the Securities and Exchange Commission (SEC) claimed violated the law.

According to Deaton, institutional sales met all the factors of the Howey Test, while programmatic sales on exchanges fell short. He also emphasized that the Howey Test does not require judges to assess the buyers’ level of sophistication or consider the policy implications of the Securities Act of 1934.

The significance of the Torres Doctrine lies in its preservation of the authority of the courts in the face of technological innovation. It ensures that the law remains the ultimate decision-maker, even as new technologies emerge. Judge Torres demonstrated that applying the Howey Test to modern-day blockchain technology is not as straightforward as some may assume.

Deaton also drew attention to the SEC’s claim in the SEC vs. Coinbase case, asserting that the Howey case equips industry participants with the necessary knowledge to determine whether a token is a security. However, the outcome of the Ripple case contradicts this claim.

James A. Murphy, the founder of Metalawman, agrees with Deaton, stating that Judge Torres applied the law objectively and without bias. He emphasized that Judge Torres’ extensive legal background and experience in both state and federal courts make her ruling credible and unbiased.

Judge Torres’ ruling has broader implications for the cryptocurrency landscape. It signifies a new era of legal interpretation and application in response to the evolving world of technology. While the full extent of the “Torres Doctrine’s” impact is yet to be understood, it undoubtedly represents a significant step forward in legal precedent for cryptocurrencies.