NEW YORK (Reuters) - The U.S. Securities and Exchange Commission said on Wednesday it is appealing a court ruling that restricted its ability to regulate cryptocurrency markets.

Wall Street's main securities regulator will ask the 2nd U.S. Circuit Court of Appeals in Manhattan to review a July 2023 decision that the XRP token sold by Ripple Labs on public exchanges did not meet the legal definition of a security.

The decision by U.S. District Judge Analisa Torres meant the sales of the token, totaling about $757 million, were not subject to investor protection laws that the SEC enforces.

If the appeals court agreed, or defined securities narrowly, it could impede the SEC's ability to police the cryptocurrency exchange Coinbase and other defendants selling or making markets for newer, non-traditional financial products.

Torres also gave the SEC a partial victory, saying another $728 million of XRP sales to institutional investors should have complied with securities laws.

She fined Ripple $125 million in August, but put the fine on hold pending an appeal. The SEC had sought $2 billion. Torres' stay would last until the 2nd Circuit ruled, court records show.

Lawyers for Ripple did not immediately respond to requests for comment on the SEC's notice of appeal, which was filed in Manhattan federal court. Ripple could also appeal parts of Torres' decisions that it disliked.