The CFTC and the SEC are collaborating to identify the status of different cryptocurrencies. But the situation with XRP is still unclear.
XRP status has been classified as unclear. The U.S. Commodities and Futures Trading Commission (CFTC) Chairman Heath Tarbert has indicated. He said this in an interview while trying to clarify the status of different cryptocurrencies. He noted:
“It’s unclear. Stay tuned I’d say. Part of the issue is that our jurisdiction we share with the SEC [Securities and Exchange Commission]. If it’s a security, it falls under their jurisdiction. If it’s a commodity, it falls under ours.”
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He also indicated that the CFTC and the Securities and Exchange Commission (SEC) were working together in identifying the status of the different cryptocurrencies.
On the status of cryptocurrencies such as Bitcoin and Ethereum, Heath referred to them as commodities.
XRP on the other hand still defies identification. The token is used on RippleNet provided by Ripple to facilitate funds transfers globally. At the same time, it has been used as a store of value. This kind of dual use-case scenario has confused investors for a while now.
It has also led to problems. In 2018 Ripple Labs Inc., has been slammed with a lawsuit by disgruntled investors. The investors claim that Ripple and its executives broke Securities laws. The case is still on. Ripples executives have continuously denied any wrongdoing.
XRP Status Endangers the Crypto Space
This has also led to further scrutiny of the crypto space by United States regulators. The recent issues that Telegram is experiencing with the U.S. SEC come to mind. XRP as a token has also had its issues. The continuous issuance of the token from escrow wallets has led many to question its status.
The low prices of the tokens back up this claim. XRP prices historically have been low since crypto winter. Many believe that the escrow issuance of the tokens is to blame. Excess supply of the tokens without proper usage on RippleNet could depress prices.
That is not to say that XRP hasn’t proved to be a workable cryptocurrency. The use of the token in terms of value transfer across borders has been proven on a global scale. RippleNet and the various components within the XRP ecosystem have shown this. Financial institutions have also used RippleNet with much success.
The issue that remains, of course, is the competition. As financial institutions join the decentralized ledger technology (DLT) space, new solutions will be found. As such, the use-case scenario of XRP will fall. This will also further depress XRPs’ prices. XRP will have to undergo another evolution then. The narrow use-case of the token is unsustainable. It will also give the HODLers of the token greater hope.
Before that can happen, Ripple needs to clearly define the XRP status. As a security, the token will be subject to all sorts of scrutiny by the SEC. As a commodity, the CFTC’s coordination with the states will ensue. For now, prices will still remain where they are. That is until the issue is resolved.
At the time of writing this article, XRP prices were at $0.22. This is a 4.22% rise in the past twenty-four hours.
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