And in the end, the cryptos win. Last night saw the conclusion of a bitter battle. A between the US regulator and the Ripple company.issuer of the token XRP. Even though both sides seem to have won a good point in the decision rendered by the judge Torresit’s XRP and altcoins as a whole that emerge victorious. Here are some explanations.
The courts have ruled: XRP is not a security
Since December 2020, Ripple has been fighting a lawsuit that has already cost it hundreds of millions of dollars. Taken to court by the SEC (Securities Exchange Commission), the company was accused of selling financial securities (securities ). The regulator criticizes Ripple for selling its XRP token without prior registration.
A token that the SEC considers to be a share. Except that nothing is defined in the law about cryptos, which could be shares like anything else.
Last night, after a year and a half of battle, the judge ruled. No, the XRP token is not a share under the law. This decision is crucial, as it will be binding in all future lawsuits. Ripple is one of the most centralized organizations in the crypto sphere.
If XRP isn’t a stock, then neither are the majority of other cryptos. And in fact, the SEC’s cumbersome and restrictive regulations don’t apply. A significant and liberating decision for the sector.
Naturally, the price of the XRP token soared as it performed almost +100% for the day. A behavior not seen since the previous bull run for a crypto with such a large capitalization. This moment was eagerly awaited. Brad GarlinghouseRipple’s CEO, welcomed the news on Twitter.
« We said in December 2020 that we were on the right side of the law, and we will be on the right side of history. Thank you to everyone who helped us reach this decision. [de justice] today. A decision [qui compte] for crypto innovation in the U.S. »
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If XRP isn’t a financial security, then neither are ETH and BTC
In practice, however, the court ruling is more nuanced. The XRP token is indeed considered a security in cases where the token sale was carried out over-the-counter (Over the Counter or OTC) to institutional investors. On the other hand, XRP is not considered a financial security for sales via exchanges such as Binance.
Clearly, if a crypto is sold on the market, then it is not a financial security. Brad Garlinghouse highlights this extremely important part of the decision.
« XRP, as a digital token, is not intrinsically [un contrat, une transaction, un schéma] that meets the criteria [du test] Howey’s criteria for investment contracts. »
Thus, the 3e Howey’s test lawon which the SEC bases its classification of cryptos as financial securities, would be legally inapplicable. This could potentially put a stop to all attacks by Gary Gensler against the sector since the beginning of the year. Hence the sense of victory that has gripped the entire crypto sphere.
« This is mostly a very good sign for alts, and a surprise victory for XRP. (…) Selling tokens via exchanges is allowed [par la justice]. (…) If XRP is not a financial security, almost [aucune crypto] sold on exchanges is. »
Gary Gensler, the head of the SEC, must be eating his heart out right about now. His vendetta against the industry has just suffered a setback as sudden as it is disarming. His legitimacy to continue attacking the industry has just been called into question by the courts. He should no doubt find it hard to refuse. countless requests for Spot Bitcoin ETFs in June, spurred on by the giant BlackRock.
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