FinCEN states that XRP is not a security. Last week, Securities and Exchange Commission (SEC) acknowledged that Bitcoin and Ethereum could not be recognized as securities because of their decentralization and would not be regulated by relevant laws. However, the question of whether the third largest cryptocurrency Ripple XRP is a security remains open. This is reported by Bitcoinist.
XRP Is Not a Security. FinCEN Classify XRP as a Currency
Ripple community has always been worried if XRP will be classified as a currency or security. Some believe that the decision of the US Financial Crimes Enforcement Network (FinCEN), issued in 2015, allows to classify XRP as a tool that can not be controlled by the SEC.
As Twitter user Richard Holland notes:
“FinCEN already signed an agreement with Ripple Inc. allowing them to continue their XRP sales. If XRP is an unlicensed security then FinCEN now has to explain why they signed an agreement allowing the sale of said unlicensed securities. Never going to happen. XRP isn’t a security”.
During the proceedings in 2015 FinCEN accused Ripple Labs of violating the Bank Secrecy Act (BSA). FinCEN stated that the startup acted as a financial services company without registration with FinCEN. In addition, Ripple at that time did not use the proper practices to prevent money laundering.
Subsequently, the conflict have been settled, the criminal charges was terminated, and Ripple was fined $ 450,000. More importantly, the sale of XRP was allowed. Ripple Labs also made the necessary changes to its own protocol to ensure transparency of transactions. Prosecutor Melinda Haag, commenting on this case, said that she hoped that Ripple would set an “industry standard” for future investment proposals in the field of digital currencies.
Brad Garlinghouse about XRP
Not everyone agrees that FinCEN’s decision will prevent the SEC from recognizing XRP as a security. But the existence of a precedent is undoubtedly an important factor in regulation. Ripple’s supporters say that XRP does not meet the definition of a security. Ripple CEO Brad Garlinghouse, commenting on the lawsuits filed against the start-up, said:
“Whether or not XRP is a security shall not be dictated by one lawsuit. The SEC is the governor of that. I think it is very clear that XRP is not a security. It exists independently of Ripple the company. If Ripple, the company shut down tomorrow, XRP will continue to exist”.
We remind that currently, Ripple is facing class-action lawsuits. The plaintiff claims that XRP is a security and controlled by Ripple. Ripple Labs has hired former SEC officials to represent them in court.