- When it comes to XRP, the security status of the token has been a conversation piece within the industry for a while.
- The situation has been massively taken out of control with lawsuits being filed against the company claiming the firm sold tokens as an unregistered security.
When it comes to the XRP tokens from the San Francisco-based blockchain initiative Ripple, the security status of the token has been a conversation piece within the industry for a while. The situation has been massively taken out of control with several class action lawsuits being filed against the company claiming that the blockchain firm sold unregistered tokens as an unregistered security.
The former chairman of the CFTC (commodity futures trading commission), Christopher Giancarlo has given his opinion on the token in an article for the international finance law review. Published earlier this week on the 17th of June, the former chairman claims that the token is not a security but given that he is financially connected to Ripple, his response was curious to say the least.
The former chairman served as the 13th CFTC head for a term that expired in April last year. Whilst he was working for the commission, he was responsible for the decision that led to the classification of both bitcoin and ETH as commodities.
According to him, the token doesn’t satisfy any of the requirements put forward in the Howey test. Therefore it cannot be considered a security. Under this test, and as it is considered a security if it involves a contractual agreement in a common enterprise and that the buyer expects profits in the future from the efforts of a third party or a promoter. Giancarlo has said:
“The mere fact that an individual holds XRP does not create any relationship, rights or privileges with respect to Ripple. Ripple has not marketed XRP as an investment product, nor has it promised XRP holders any sort of profit or return on investment.”