xrp crypto stock

XRP May Have Scored a Win, but That Doesn’t Make It Any Safer

With All These Delistings, There's Just No Good Reason to Buy Ripple
Written by publisher team

While most major cryptocurrencies have enjoyed a massive rally this year due to the meteoric rise of Bitcoin (CCC:BTC-USD), not all participants in digital markets are so lucky. for example Ripple Labs And its cryptocurrency XRP (CCC:XRP-USD). As you know, the Securities and Exchange Commission has taken a bleak view of XRP, arguing that it is masquerading as security as a blockchain reward token.

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Due to the heavy accusation, several exchanges that held XRP have delisted it from their platform. It is one thing to carry questionable cryptocurrency – it is quite another to knowingly support an illegal security.

Unfortunately, no matter how individual exchange operators felt, they had no choice but to walk out. The juice isn’t worth it, not when you’re dealing with a lawsuit from the SEC.

Here, the protocol defining the XRP token did not help. To summarize briefly, the lion’s share of cryptocurrencies can be mined, making them decentralized (i.e. the determination of supply depends on the public actors that participate in the open source network). With XRP, it’s different; The supply-side equation seems to fall within the purview of Ripple Labs.

The Securities and Exchange Commission (SEC) has certainly taken this position aggressively, stating that “the development and distribution of XRP has been centralized by Ripple.” In other words, Ripple or any other party can call XRP as they want – a great cryptocurrency or security. The point is, if in the first place mission As a guarantee, it is a safety.

But according to an analysis provided by the judge helping with the discovery and mediation process, Ripple may have won a crucial legal battle. Judge Sarah Netburn of the Southern District Court in New York appears to take the position that XRP is a cryptocurrency, not a security.

Additionally, an SEC attorney under question stated that “only Ripple and its affiliates can sell XRP illegally.” This seems to indicate that delisting exchanges can reintroduce the token.

Don’t get too excited about XRP

If you are a significant holder of XRP, you will obviously score whatever wins you can get – a huge win. But the dark cloud is that I’m not sure if it’s enough to get XRP out of its jam.

Essentially, the Securities and Exchange Commission will continue to refine the centralization argument. Honestly, it doesn’t look good that the protocol appears to be centralized – this has been a long critique of Ripple.

Here’s why it matters: If Ripple distributes XRP with the sole purpose of raising capital for its business and giving the impression that investors can benefit from a valuation increase, how is that different from publicly traded securities?

After all, participants in the secondary market cannot increase the outstanding shares of a particular company. This decision rests with the management. So it is with Ripple, at least under the prevailing assumption of centralization. Therefore, if Ripple Labs can prove that XRP is not decentralized, it will be of great help.

But the company didn’t even get out of the woods at that time. It’s really about how much the SEC can extend its reach. For example, is the mere fact that public nodes can mine a target cryptocurrency enough to classify it as a currency and not as a security? If yes, then it is assumed that Ripple just needs to prove that its XRP protocol is decentralized and free at home.

However, what if the SEC established Job As its primary decision, not necessarily centralization or decentralization? In this case, it is not only XRP that is in trouble, but a host of other crypto-related projects.

This is because there are many institutions in the digital markets where they distribute tokens in the hope of raising capital for their business ventures. To me (and I’m sure the SEC), this sounds like a bypass of the traditional IPO process.

Ripple’s potential two-step strategy

To keep our attorneys happy, nothing in this article should be construed as legal advice. I’m just giving my personal thoughts on the situation and nothing more.

With this warning out of the way, it appears that Ripple’s lawyers have a two-step strategy ahead of them. First, they should limit the SEC’s battlefield by keeping the focus on centralization, not functionality. If the SEC can sue the latter, it could turn ugly for XRP and other cryptocurrencies.

Secondly, Ripple should drive home the utilitarian argument, whether XRP is centralized or not, the main point of creating the token in the first place was as an experiment to develop a fast and economically efficient transaction network. Since the securities represent only the ownership of the stock and not the benefit, Ripple may have escaped the accusation unscathed.

Of course, you don’t know what tricks the SEC has up its sleeve. Therefore, you should proceed with extreme caution, if at all.

As of publication, Josh Enomoto held a long position in BTC and XRP.

Josh Enomoto, former chief business analyst for Sony Electronics, has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has provided unique and critical insights into the investment markets, as well as many other industries including law, construction management, and healthcare .

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