Cryptocurrency
Former CFTC Chair Giancarlo Lays Out Why He Thinks XRP Isn’t a Security
As reported at Coindesk, “XRP is more like an alternative currency than a security, argues the former chair of the U.S. Commodities Futures Trading Commission (CFTC). “In an op-ed for the International Financial Law Review, Chris Giancarlo, who was chairman of the CFTC until last year, argued Ripple Labs hadn’t violated any U.S. securities regulations and […]
As reported at Coindesk, “XRP is more like an alternative currency than a security, argues the former chair of the U.S. Commodities Futures Trading Commission (CFTC).
“In an op-ed for the International Financial Law Review, Chris Giancarlo, who was chairman of the CFTC until last year, argued Ripple Labs hadn’t violated any U.S. securities regulations and that the third-largest crypto by market cap should have the same legal status as bitcoin or ether.
“’XRP should not be regulated as a security but instead considered a currency or a medium of exchange,’ he wrote with Conrad Bahlke of international law firm Willkie Farr & Gallagher. They said XRP doesn’t hit any of the ‘prongs’ of the Howey Test – a landmark case that defines what is considered a security in the U.S.
“According to Giancarlo and Bahlke, XRP was never marketed as a security, nor were investors promised any returns; the token has a very specific use case for liquidity and settlements; Ripple has never offered holders any rights of ownership or share of the profits. There is, he argues, no investment contract or formal relationship that exists between Ripple Labs and XRP token holders.
“But the linchpin in his argument appears to be that there’s a divergence between how Ripple has defined XRP and what token holders themselves actually use it for.
“’Ripple has repeatedly emphasized the functionality of XRP as a liquidity tool and a settlement mechanism,’ Bahlke write, but there are plenty of investors who use XRP as a means of payment or just buy it hoping its value will increase…”