Ripple can ‘cope’ if XRP turns out to be security post SEC verdict: Expert
The token XRP, which is connected to the blockchain payment firm Ripple, has been the center of debate on whether securities laws apply to cryptocurrencies or not.
Currently, XRP is the third largest cryptocurrency by market capitalization, the first two being Bitcoin and Ethereum. However, the top two coins have not been caught up in the controversy as they are not considered securities. On the other hand, XRP is described as “independent digital asset” by Ripple. The whole situation has created paranoia in the community, especially since the company still owns over 60 billion of the 100 billion tokens created.
What if SEC states XRP as security?
In the U.S., an ongoing lawsuit claims that the token was created “out of thin air” as part of a “never-ending initial coin offering” used to “raise “hundreds of millions of dollars”. Cory Johnson, Ripple’s chief market strategist, in April said that, “We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law.” CEO Brad Garlinghouse last month said, “I think it’s really clear that XRP is not a security,” adding that the blockchain, or public ledger, “exists independent of Ripple.”
For those still confused, securities are ownership shares that need to be registered. If SEC classifies XRP as a security, the token will be impacted. Olymp Capital CEO Christophe de Courson told Express.co.uk: “If the SEC states XRP is a security, the coin will definitely take a big hit because it is listed on all the major exchanges – except Coinbase – and moreover, I would expect a strong negative reaction of the global crypto-market for such news.”
Lawsuits targeting Ripple entities have already claimed that the coin is a security. Courson believes that the coin wouldn’t be the only one affected by the classification. In fact, Ripple-affiliated corporate entities will also suffer from it. Moreover, “XRP is not needed when using xCurrent, the product that gives banks ability to move efficiently money across border. xCurrent being the most used ripple’s product, I think that even if a classification of XRP as a security will be painful for Ripple , they could cope with it.”
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