In an interview with CNBC, a senior executive of Ripple said the company’s native XRP token is not a security. The statement comes after widespread speculation regarding the digital token’s listing on Coinbase, which follows strict guidelines and strives to remain legally compliant.
Cryptocurrencies Are Securities, Says SEC
According to the U.S. Securities and Exchange Commission (SEC), general security laws apply to cryptocurrencies. The Commission has also gone ahead and issued multiple subpoenas and asked for more clarity and information on transactions related to new digital coins.
But according to Ripple’s chief market strategist, Cory Johnson:
“We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law.”
Coinbase Denies Ripple Listing
Of the 100 billion XRP tokens ever created, San Francisco-based Ripple owns about 60 billion. The company aims at easing the workload for financial institutions via its blockchain-powered payment network and offers XRP as an option to its customers for use in transactions.
A feud between the regulators and XRP has never taken place, and Ripple is keen on getting its digital currency listed on Coinbase.
“Coinbase never ever raised the issue of whether or not XRP is a security in our discussions about listing XRP,” Johnson said. However, Coinbase has denied any listing rumors and emphasized on its transparent Digital Assets listing policy, released on January 4, 2018.
In March 2018, after an announcement that CNBC’s Fast Money episode would feature the CEOs of the two firms, it seems some cryptocurrency enthusiasts assumed that Ripple would be listed on Coinbase. However, it turned out that the conversation between them was not about XRP’s listing. Instead, they spoke about general industry issues.
The token witnessed a price spike after rumors about arrival of XRP on Coinbase. Historically, news of a coin’s addition to Coinbase sparks curiosity and speculation amongst cryptocurrency enthusiasts, as it could potentially attract “new money” from about 13 million investors registered on the exchange. But, prices went down soon after Coinbase denied rumors.
Nevertheless, Cory’s statements may have certainly turned the tide in favor of Ripple again, as the price of the digital token increased 15 percent after the interview, at the time of writing.
Community Argues Ripple Is Security
Despite Ripple’s statement, it can be argued that the company distributes XRP by selling the tokens, with most buyers purchasing them with the intentions of investment and not money transfer. Furthermore, the company loosely defines its tokens, which could lead the SEC to consider them as a “security,” and subject it to the same laws as stocks, bonds, and even ICOs.
Without a clear definition, Coinbase keeps its distance from the world’s third-largest cryptoasset by market cap, as it could result in legal troubles for the exchange in case they list securities.
Historically, Coinbase has maintained a legal and fully-compliant approach to its business, providing no chance of a controversy and ensuring it stays in the government’s good books.
Previously, the CEO of Ripple, Brad Garlinghouse, said that Ripple has always strived to work with governments:
“It’s incredibly important that the entire industry recognizes that we have to work with the regulators, we have to work with the system… There are some within the bitcoin community that really advocated not just down with banks but down with governments, we have been a contrarian relatively speaking in that regard.”
Ripple Allegedly Tried To Bribe Coinbase
As reported by BTCManager on April 6, Ripple had attempted to bribe Coinbase with “financial incentives,” and even offered to pay the listing amount in cash.