XRP should not be viewed as a security by SEC: Congressman
XRP’s classification is in limbo and needs a different type of treatment from the SEC due to its current status causing numerous lawsuits for Ripple
US Congressman Tom Emmer recently voiced his opinion regarding the regulatory status of XRP. He believes that XRP is not a security, and that its status should be recognised legally.
The Town Hall presentation was joined by many prominent names in the crypto industry, such as eToro USA’s managing director, Guy Hirsh, the CEO of BitPay, Stephen Pair along with Paxos’ Chad Cascarilla and Ripple’s CEO Brad Garlinghouse.
Garlinghouse commented on XRP’s regulatory limbo:
“The biggest challenge Ripple has faced and anyone developing in the XRP community has faced is the lack of clarity on how assets beyond Bitcoin and Ether are gonna be defined by the SEC.”
The same sentiment was shared by current SEC commissioner Hester Peirce in a recent interview.
She said:
“I don’t think it’s a good thing that people don’t have a compliant way to get from the point where they’ve funded and built a network to the point where they’ve gotten the tokens into the hands of people who want to use them…It’s really important for people to have a way to get to the point where the tokens are out there circulating”
Lack of certainty may be hurting Ripple
According to a report by Cointelegraph, the lack of clear classification for XRP has resulted in numerous lawsuits against Ripple.
The most recent one happened in May 2020 where a company named Bitcoin Manipulation Abatement LLC accused Ripple of misleading investors into selling them an unregistered security.
“…in order to drive demand for and thereby increase profits from the sale of XRP, Defendants have made a litany of false and misleading statements regarding XRP in violation of California’s securities laws, and false advertising and unfair competition laws”.
An ongoing class-action lawsuit in 2018 accused Ripple of misleading investors and is seeking damages and compensation for legal costs.
While there is no way to know where US regulators will go with their duties, it is likely that Ripple will seek a jurisdiction that is clear in its regulatory requirements.
The US has been a powerhouse in the financial industry for decades — to maintain that status, it will need to create regulations that help fintech companies, such as Ripple, do business.
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Nicholas Say, Khareem Sudlow
