The former chairman of the US Commodity Futures Trading Commission J. Christopher Giancarlo said that XRP is not a security. The fourth-largest crypto by market capitalization continues to split opinions in the crypto community, owing largely to the fact that Ripple Labs control the main bulk of its supply. According to a report published this week, Giancarlo also known as “Crypto Dad,” in the crypto community, argued that XRP does not constitute an investment contract.
“XRP cannot be an investment contract.”
The former head of the US CFTC said that Ripple’s XRP can not be an investment contract as there is no contract or arrangement to speak of between Ripple and the overwhelming majority of XRP holders. He added that to the contrary, the contracts that Ripple has entered into explicitly exclude general XRP holders as third-party beneficiaries. According to the former US CFTC head, XRP and Ripple’s operations do not meet up with criteria enshrined in the four prongs of the Howey Test. For Giancarlo, Ripple Labs has not marketed XRP as an investment product but rather as a bridge currency for interbank settlement.
US SEC has does not consider BTC and ETH as security.
The US Securities and Exchange Commission has come out in the past to clarify that Bitcoin and Ethereum are not securities. The Commission has also maintained that initial coin offering (ICO) tokens are likely to be securities. For XRP, the final decision is yet to emerge, with the company behind XRP being the subject of multiple lawsuits from aggrieved investors. However, Ripple has maintained its stance that XRP is not a security. Current Ripple CEO Brad Garlinghouse has several times said that XRP would continue to hold value even if Ripple goes out of the business. Ripple has also been accused of selling a large amount of XRP for its benefits.