In an opinion piece for the Financial Law Review, Chris Giancarlo, the immediate past chairman of the Commodities Futures Trading Commission (), has argued that XRP is not a security, but more like an alternative currency, according to reports on June 17, 2020.
Giancarlo Makes Case for XRP
While Ripple’s blockchain solutions are rapidly gaining adoption around the globe by a vast array of highly reputed banks and financial institutions, the distributed ledger technology (DLT) project has faced several criticisms and backlashes from critics and investors alike who feel XRP is a security and not a utility token as touted by its creators.
In the latest development, Chris Giancarlo, the former chairman of the United States Commodities Futures Trading Commission (CFTC), who is now the Senior Counsel at Willkie Farr & Gallagher law firm, has stated categorically that XRP is not a security token and as such the altcoin should have the same legal status as Satoshi Nakamoto’s bitcoin ().
In an op-ed written for the International Financial Law Review, Giancarlo, who also doubles as the head of the Digital Dollar Foundation, alongside Conrad Bahlke, Counsel at the New York-based law firm, argued that XRP doesn’t have to come under the purview of the Securities and Exchange Commission (SEC) as it’s not a security.
The seasoned legal practitioners have made it clear that XRP passes the Howey Test with flying colours since the Ripple team never marketed it as a security or promised investors any returns; moreover, the altcoin has a specific use case as liquidity and settlements digital asset
XRP a Bonafide Alternative to Fiat Money
What’s more, the team has argued that the fact that there is no form of investment contract or formal relationship between Ripple and holders of XRP further makes it clear that the digital asset is not a security.
“XRP should not be regulated as a security but as a currency or medium of exchange. The fact that some investors may buy XRP with the hope that it may appreciate in value cannot be dispositive as the same is equally true of a large number of bitcoin and ether speculators,” they stated.
While XRP is somewhat a centralized cryptocurrency, as Ripple Labs maintains sole control over the amount of XRP in circulation and the firm dumps large chunks of its XRP holdings into the market each month, to the detriment of investors, the team says the increased adoption of XRP by businesses and consumers alike, “further underscores the utility of XRP as a bona fide fiat substitute.”
Interestingly, the latest op-ed has attracted huge criticisms from some members of the crypto space, with Jake Chervinsky, general counsel at the decentralized lending platform, Compound labeling it as irrelevant.
“There are only two opinions about XRP’s security status that matter: those of the courts and the SEC. Everything else at this point is just noise,” he tweeted.
At press time, XRP is the fourth-largest cryptocurrency in the world. The price of XRP sits at $0.192151, with a market cap of more than $8.4 billion as seen on CoinMarketCap.