The recent court-ruled assessment of Ripple’s XRP token is drawing much diverse contemplation. After a span of two years marked by legal clashes initiated by the U.S. Securities and Exchange Commission, a certain ruling designated XRP as an unregistered security when traded by institutional investors. But surprisingly enough, it’s not the case when acquired by any other investor category.
Back in 2020, the SEC filed a lawsuit against Ripple on grounds of not registering their token XRP as a security prior to selling around $1.3 billion in value. The days that followed were punctuated by Ripple’s attempts to assert the inherent absurdity of branding XRP a security. No to forget, the co-existence of Ripple and XRP could make XRP buyers anticipate profit from the token issuer’s management or business efforts, adhering to the rudimentary definition of a security. Regardless, XRP purists insist it cannot be a security as it’s essentially branded a cryptocurrency.
Last week’s announcement led to a near doubling of XRP’s token price, and trading volumes skyrocketed by a staggering 1,351%. However, this development doesn’t necessarily clarify the legal status of cryptocurrencies in the United States. Indeed, the SEC has its definition – all entities are securities barring Bitcoin and perhaps Ethereum. However, the SEC’s opinion isn’t the definition. As a result, we’ve landed in a scenario where a crypto asset is sometimes an unregistered security, further deepening the divide between retail and institutional investors.
Here’s an interesting analogy – if someone buys a house for investment purposes, they are purchasing real estate. Conversely, if they buy a house for habitation, they aren’t. This comparison could depict the current bewilderment surrounding the perception of XRP. Either it is a security or it isn’t.
Contrary to JMP Securities perspective, this isn’t a pioneering win for the crypto industry. While they believe the recent ruling provides clarity about what does and does not make a security, it seems more like the judicial resolution to “is this a security?” is hanging in a balance and it depends.
In essence, crypto law remains a complex territory to navigate, with fluctuating regulations and perceptions adding to the confusion. As this situation continues to evolve, crypto enthusiasts must remain vigilant and adapt to the ever-changing landscape.
Source: Coindesk
