Good morning. Here’s what’s happening:

Prices: XRP, XLM have a day in the spotlight. Bitcoin loses $30K.

Insights: Ripple’s partial victory left key questions unsettled. Preston Byrne told CoinDesk TV that lawmakers need to create a “legal regime” that accounts for digital assets’ unique characteristics.

XLM, XRP Lead Altcoin Rally

XLM and XRP led a posse of altcoins out of a price quagmire of the past five days, rising by double-digits and outperforming still-sluggish bitcoin and ether on Wednesday.

Blockchain-based payment platform Stellar Lumens’ XLM was recently trading above 15 cents, up 18% over the past 24 hours. The token last hit those lofty heights a week ago when it doubled in price, part of a crypto market surge that followed Ripple’s partial victory in a long-running legal feud with the Securities and Exchange Commission, before sinking in the ensuing days. At the start of the week, XLM was trading just above 13 cents.

Ripple’s XRP, the third largest crypto by market capitalization, was recently changing hands above 82 cents, up 6.8% from Tuesday, same time. XRP has held most of its gains since last Thursday. The CoinDesk Market Index, a measure of crypto markets performance, was recently trading up 0.5%

Markus Levin, co-founder of XYO Network, attributed XRP’s Wednesday spike to continued excitement about last week’s U.S. federal court decision, which established that XRP token sales on exchanges and through algorithms did not constitute investment contracts. The ruling has spurred a number of exchanges such as Coinbase, Kraken and Bitstamp to relist XRP, leading to a jump in investments, trading volumes and open interest for futures contracts.

“In short, we’re seeing a return of investors that had previously been spooked by recent regulatory measures,” Levin wrote in an email to CoinDesk.

ADA and SOL, the native cryptos of smart contracts platforms Cardano and Solana, rose over 6% at certain points, far outstripping bitcoin and ether, which slogged through another dispiriting day of little price movement. Bitcoin was recently trading at $28,877, roughly flat over the previous day. Ether had edged down the better part of a percentage point to trade just below $1,900.

Equity markets inched upward for a third consecutive day as investors continued their embrace of encouraging second quarter earnings by major financial services firms even after a 58% plunge in Goldman Sachs profits. The S&P 500 closed up 0.2%.

In an email to CoinDesk, Lex Sokolin, managing Partner of Web3 investment fund Generative Ventures, wrote that markets’ lethargy in recent days reflects their cyclical nature. There’s often “run-ups in anticipation and in response to news, and then a sell-off once the positive news has been incorporated into the price,” Sokolin wrote. Crypto is full of momentum and narrative traders, and this pattern persists — “the market animal spirits.”

Noting multiple market friendly events in recent weeks, including the XRP decision, an improving macroeconomic landscape and BlackRock spot bitcoin ETF filing, he added: “Actually what matters is just the possibility of support.”

Biggest Gainers

Biggest Losers

The Need for a Crypto-Specific “Legal Regime”

A U.S. federal court’s decision last Thursday may have offered Ripple a partial win in its ongoing court case against the Securities and Exchange Commission (SEC). But the ruling failed to clarify fundamental issues that would allow Ripple and other crypto organizations with tokens to operate on more solid ground, Preston Byrne, a partner at the law firm Brown Rudnick, told CoinDesk TV’s “First Mover program on Wednesday.

Byrne said the ruling had surprised some lawyers by veering from more than 70 years of precedent following the Howey decision, which determines whether a transaction is a security. Regulators have wrestled with if and how the so-called Howey test should apply to digital assets.

“The problem isn’t that the decision provides certainty for Ripple in this particular litigation,” Byrne said. “The reason there’s uncertainty is because this court has now ruled differently than everyone expected it to, based on 70-80 years of precedent.”

Byrne added: “So as a consequence, you can’t be sure where you stand in the United States. Some issuers are going to make the decision to proceed where perhaps they shouldn’t, and other companies that might wish to proceed, if they had a beter regulatory regime – for example, in the United Kingdom or Europe, which provide a degree of certainty over regulatory treatment of tokens – may not so.”

The U.S. District Court of the Southern District of New York ruled that the sale of Ripple’s XRP tokens on exchanges and through algorithms did not constitute investment contracts. But the court decided less favorably to Ripple that the institutional sale of the tokens violated federal securities laws.

Byrne said that “crypto isn’t a security in the traditional sense,” noting its “self-sovereign nature,” and that “people spend it in applications which provide useful software.” And he suggested that the U.S. Congress should create regulation that considers these unique characteristics.

“We need a legal regime that recognizes that, while also providing enhanced protections for investors, such as regulation of financial promotions and disclosures by issuers, without shoehorning it (crypto) into a securities regime,” Byrne said.

He continued: “We need a regime which is make for crypto.”

Important events.

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CoinDesk TV

In case you missed it, here is the most recent episode of “First Mover” on CoinDesk TV:

Rep. Ritchie Torres (D-N.Y.) discussed the future of crypto regulation as the lawmaker calls out the SEC in the wake of the Ripple court ruling. Brown Rudnick partner Preston Byrne argued why the split decision from SEC v. Ripple Labs throws U.S. crypto-token regulation into disarray. And, ProChain Capital president David Tawil shared his crypto markets analysis.

XRP Blockchain Still Faces Centralization Caveats as Ripple Regulatory Threat Recedes: Ripple scored a partial win against the SEC last week in a summary judgment that was celebrated across the crypto industry. Why does the project itself remain so controversial?

The GBTC Discount Is Narrowing; Here’s Why It Matters: The possibility the SEC will approve the conversion of GBTC into an ETF is playing a role, according to analysts.

Polygon Mulls Governance Restructure in Polygon 2.0 Roadmap: Developers have proposed an “Ecosystem Council” to push smart contract upgrades, as well as changes to how community-based funding works.

StarkWare’s ‘Starknet Stacks’ Could Add to Growing Field of Blockchain-in-a-Box Offerings: The announcement is part of a growing trend in Ethereum’s layer-2 ecosystem, where developers can create application-specific chains using the blockchain’s native software stack.

Solana’s Largest Protocol, Marinade, Bets Growth on ‘Native’ SOL Staking Product: Marinade Finance contributors say the new service could appeal to institutional investors.

Edited by Bradley Keoun.