The next most controversial question after “should Bitcoin be legal?” has been “is Ripple XRP a security?”. Unarguably, Ripple has spent a great portion of its campaigns in the last year defending the fact that its XRP token is a cryptocurrency and not some digital fiat currency or security. There have been several allegations levelled against the Ripple Labs team claiming that its token is not a cryptocurrency as they claim but some regular security which is being masqueraded as a crypto.
The SEC, recently made some comments about the XRP token which suggested it was a security. A representative from Ripple also stated to media house “Express.co.uk” that
“Everyone is free to say what they want or pursue their own agenda in the media, but ultimately the facts around the XRP will win out over uninformed speculation XRP doesn’t give its owners shares in Ripple, the XRP Ledger is decentralised among 150 plus independent validators – Ripple operates only 14 of them – and XRP would continue to exist even if Ripple disappeared tomorrow. … Based on these fact…we continue to believe XRP should not be classified as a security”.
It would seem the parties associated with the XRP token are quite fed up with this argument which keeps going up and down every passing day.
The Case For Ripple XRP
The XRP token is basically does not give any of its owners shares in the Ripple company which is believed by many to be the parent company of XRP. This deprives it of one of the very key features of securities. Moreover, the decentralised ledger which ha does XRP is spread across 140 validators – 14 of which at managed by Ripple. If this is anything ro go by, then we can expect XRP to outlive Ripple should the latter die away today.
Most people believe yet still that it is a cryptocurrency in a way and a security in another. It is for the reason there have been many debates as to whether the laws used for the regulation of securities on the stock market should be applied to cryptocurrencies in general. So apparently the trouble isn’t with XRP alone but with cryptocurrencies, it’s just that XRP is at the front of the battle – at the core of the argument as the case study.
XRP has been accused of been for the benefit of some sort of monopoly as Ripple holds 60% of all XRP tokens, a percentage that translates to 60 billion of 100 billion tokens. The SEC also accused Ripple of creating XRP out of thin air in a what it calls an ICO which is “never ending”, in a bid to raise some “hundreds of millions of dollars”.
And as is expected, the reply from Ripple also came through
“We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law.” Cory Johnson.
An industry genius, Samuel Leach, had some thoughts to share on the matter.
“For now most cryptocurrencies to be listed on US exchanges have to pass the Howey test, to determine whether an asset is a security or not whether an investment is made with the profits to come solely from the efforts of others…The major issue with this is that security tokens are legislated by the SEC, which has the ultimate authority to determine whether the US investors can invest in the financial instrument in question, as well as whether these need to be accredited investors.”
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