By Jody Godoy and Chris Prentice

(Reuters) -A cryptocurrency developer's landmark legal victory against the U.S. Securities and Exchange Commission (SEC) will galvanize Coinbase and other companies to resist the agency's attempt to assert its jurisdiction over the industry, experts said.

Thursday's ruling that Ripple Labs Inc did not violate securities law by selling its XRP token on exchanges was the first major setback for the SEC in a decade of enforcement against the cryptocurrency industry. Other crypto firms accused of illegally operating digital asset exchanges are exploring ways to take advantage of the ruling, according to two sources familiar with the matter who asked not to be named because they were not authorized to speak publicly.

The crypto industry is in a tug-of-war with the SEC and its Democratic chair Gary Gensler, who has described the crypto market as a "Wild West" riddled with fraud. Saying most crypto tokens are securities, the SEC has cracked down on crypto trading platforms, including the top U.S. exchange Coinbase, in an effort to bring the industry under its oversight.

Crypto firms have long disputed the SEC's jurisdiction but until Thursday no court had supported that view. Now, industry lawyers have ammunition to fight back.

"This case will cause people to rethink, and I think it already has," said Robert Frenchman of Mukasey Frenchman LLP.

The two sources, for example, said firms are considering ways to use the Judge's ruling for their defense. "I can’t imagine any of the exchanges won’t use this in some way," said one.

In 2020, the SEC sued San Francisco-based Ripple and its current and former chief executives, alleging they conducted a $1.3 billion unregistered securities offering by selling XRP, which Ripple's founders created in 2012.

U.S. District Judge Analisa Torres in New York on Thursday ruled its sales on public cryptocurrency exchanges were not offers of securities because purchasers did not have a reasonable expectation of profit that depended on Ripple's efforts, a key factor in determining if XRP was a security at the time. However, she also ruled Ripple's direct sales of XRP to investors should have been registered as securities, handing the SEC a partial victory.

Crypto proponents viewed the decision as a watershed and the judge's reasoning as a new line of defense for the likes of Coinbase, Binance, Bittrex and other exchanges targeted by the SEC on the basis they were trading securities.

"It bolsters Coinbase's and Binance's arguments that the digital assets that are traded on those exchanges would not be deemed securities," said Teresa Goody Guillén of Baker & Hostetler in Washington.