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- Experts have argued that the XRP’s vast real-world utility makes it a commodity rather than a security.
- The XRP market has an FDV of about $46.96 billion with Ripple holding the vast majority.
The final ruling on SEC vs Ripple case is undeniably a huge turning point for the cryptocurrency market in the United States and most global markets. While the SEC has managed to win in other crypto-related cases – including the LBRY settlement – the Ripple and XRP case is heavily related to the entire altcoin industry.
Moreover, the sixth largest digital asset, with a market capitalization of about $25 billion and a fully diluted valuation of about $46.96 billion, has the same tokenomics model as many altcoins trading in the market.
With Judge Analisa Torres expected to issue a ruling anytime since all the submissions were done by the end of last year, the Congress is also eagerly waiting on the decision in a bid to formulate clear crypto laws. Furthermore, other top markets like the United Kingdom, European Union, Hong Kong, UAE, Canada, Brazil, and Singapore, among many others have already enacted clear crypto rules to enable safe adoption of the nascent industry.
Closer Look at Ripple’s XRP Sales in Determination of Securities Law
Ripple Labs, a blockchain payment company, has significant control of the XRP market, amounting to more than half of reporting time. With a total supply of 100 billion and a circulating supply of 52,254,289,650 XRPs, Ripple holds the rest in an escrow account and receives 1 billion every month to incentivize its adoption. As a result, the XRP community has begun to believe the SEC could be right according to standing statutory securities law in regard to some transactions Ripple made during the early stages.
According to a retired Securities lawyer, Mark Fagel, a crypto token’s utility may differentiate if it is to be regarded as a security or a commodity. Fargel further implied that it is possible in the crypto industry for a token to begin as a security and later morph into a commodity. Fagel noted.
…..token’s utility may take it out of the ambit of securities regulation. For me, the question is: if the initial offering involved a security, is the burden on the SEC to prove each successive sale also involves a security?
Undeniably, Ripple has made significant progress in providing XRP with real-world utility, more so in cross-border payments. Reportedly, Ripple’s On-Demand Liquidity (ODL) program, which utilizes XRP to enable fast transactions, is available in more than 40 payout markets around the world. Additionally, XRP is constantly traded around the world as a commodity with its traded volume at about $478 million on Monday.
In a series of conversational tweets, an XRP holder replied to Fagel by suggesting that Ripple should be fined for its initial transactions were undeniably securities. Additionally, the XRP enthusiast suggested that Ripple should handle the escrow balance to the SEC and be permanently locked. However, the XRP trader concluded that the Judge should rule that the digital assets in circulation are commodities.
Interestingly, the former securities lawyer agreed on the matter.
https://twitter.com/marc_fagel/status/1677790166956802048?s=46&t=fCwTuqTXDGy8gGsgkboFGA
