Fintech startup Ripple is pushing back against claims that its cryptocurrency, XRP, is a security under US regulations.
The XRP token — which functions as the native currency of the San Francisco-based company’s public Ripple Consensus Ledger (RCL) and the foundation for several of the firm’s blockchain products — is currently the third-largest cryptocurrency, with a circulating market cap of more than $22 billion.
Some allege that because Ripple distributes XRP by selling the coins — and most buyers purchase them as investments — it is subject to the same securities regulations that govern stocks, bonds, and even many initial coin offering (ICO) tokens.
If true, this could have serious legal ramifications, both for Ripple and the cryptocurrency exchanges that list it for trading.
Ripple, though, argues that those claims are unfounded.
“We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law,” Ripple’s chief market strategist, Cory Johnson, said during an interview with CNBC.
The discussion over whether XRP is a security resurfaces at semi-regular intervals, but the current debate stems from comments made by Coinbase President and COO Asiff Hirji in a recent appearance what may as well be renamed the “Cryptocurrency News and Bitcoin Channel.”
Toward the end of the interview, Hirji said that the exchange and brokerage giant is already listing every cryptocurrency for which it believes there is regulatory certainty. At present, the company lists four cryptocurrencies — and XRP is not one of them.
Johnson, responding to this and alluding to recent reports that Ripple had attempted to bribe Coinbase with incentives such as an interest-free XRP loan to list the token, claimed that the exchange did not cite regulatory uncertainty as the reason for declining its offer.
“Coinbase never ever raised the issue of whether or not XRP is a security in our discussions about listing XRP,” Johnson said. “We’re 100 percent clear, it’s not a security. We don’t meet the standards.”