What happened 

The crypto market was on fire on Thursday afternoon after a judge ruled that Ripple (XRP -1.12%) is not a security (in most cases).

The U.S. Securities and Exchange Commission (SEC) has been in a battle against cryptocurrencies this year, but the first case to actually make it to court and nearly to trial is the SEC's suit against Ripple, which was filed in December 2020. There are still questions about how this applies to other tokens and whether the ruling will hold up, but for now, it's a huge win for the industry. 

Altcoins are popping the most today, but the big tokens are making nice gains as well. Bitcoin (BTC -1.86%) is up 4.7% in the last 24 hours as of 4 p.m. ET, Ethereum (ETH 0.12%) has risen 7.1%, and Dogecoin (DOGE -3.16%) is up 7%. 

So what 

The judge's ruling concluded that Ripple was a security when it was sold to institutional investors, who they said were speculating on an asset that they would then sell. But it was not a security on the secondary market because a buyer or seller on the secondary market had no way of knowing who was getting their money.

It's hard to say that this fully clarifies what is and isn't a security in the crypto industry, and it's likely the ruling will be appealed, but for now, the secondary sale of cryptocurrencies appears to be legal. This should help the ongoing trading of existing tokens, and Bitcoin, Ethereum, and Dogecoin are clear leaders from a market capitalization standpoint. 

While the secondary trading of cryptocurrencies is legal -- according to this ruling -- the initial sales to institutional investors may not be. That question will go to trial, but that will include hedge funds and venture funds that bought these assets. And it's not even clear how that trial will turn out. 

Now what 

Crypto investors have been looking for some kind of clarity in the U.S. and clearly jumped on it today. However, this is only a district court ruling, and it's the first of many potential rulings. The SEC continues to go after Coinbase (COIN 5.68%), in particular, and dozens of tokens are involved in that case. 

I do think this will push both the courts and lawmakers to act to bring even more clarity to the market. Taking loss after loss in court isn't a good look, and almost everyone in the industry is pushing for clarity about what is and isn't a security in the digital world. 

This clarity could be good for the value of Bitcoin and Dogecoin, which right now are viewed largely as stores of value or speculative assets, which seem to pass regulatory muster, at least in the secondary market. Ethereum may benefit both from secondary trading and clarity over what can be built with NFTs or other blockchain tools. 

At least for today, the crypto market is cheering a judge's ruling, but with the ups and downs we have seen the last few years, the cheering might not last for very long.