[Newsflash] The comments of the Ripple Executives seem to associate the fact that the cryptographic currency XRP is a security

Is XRP a security? This question has plagued the XRP community for years. Now, the statements made by the Ripple executive team seem to echo the idea that XRP is a security.

The problem was recently addressed by Larry Cermak in The Block. Obviously, the question is controversial: the future of Ripple (the company) could be in danger if XRP is declared a security. Holders of XRP could be left in the water with a suddenly problematic token.

The statements of Ripple executives, meanwhile, have not exactly calmed the nerves of the XRP community.

"For every penny the price of XRP goes up, the notional value of Ripple's RPP rises to six hundred million dollars"

explained a manager in a disturbing interview last year.

Technically, XRP and Ripple are separate entities, although the history of the two entities is closely intertwined. The same Ripple management team seems to have also launched XRP, although the launch dates of both projects are somewhat controversial. Today, Ripple continues to be the main token holder in the XRP ecosystem, holding up to 60% of the total XRP token supply. In addition, Ripple earns revenue by continuously selling XRP. This operation of revenue funds for the company.

Could the SEC collapse on XRP in the future?

The SEC is increasingly breaking down the token projects that have sold similar tokens in the past. While SEC's focus on the encrypted space heats up, some believe that Ripple and XRP will be the center of attention. Ripple could be accused of making an illegal token sale, not registered when selling XRP tokens, for example, and XRP could be declared as an unregistered security.

Despite the controversy, however, XRP remains one of the most promising tokens in the digital currency ecosystem. It is firmly maintaining the number two position in the encrypted space by market capitalization, dragging only bitcoins. XRP recently passed Ethereum to take up this position.

Meanwhile, from an institutional point of view, investors can take a stake in XRP by buying a share of funds such as XRP Investment Trust from Grayscale.

Today, XRP has a market capitalization of $ 13.7 billion, but huge doubts remain about how to classify XRP. Let's take a closer look at Ripple's statements to determine if there are clues as to how the SEC could regulate XRP in the future.

What does the SEC say about XRP?

As reported by The Block, the SEC has issued several statements on XRP, although they have not formally classified XRP in any category and have not issued clear declarations on the future of the digital currency.

William Hinman, director of the SEC division of Corporation Finance, in a speech last June stated that Ethereum was a sufficiently decentralized network, suggesting that ETH would not be declared a security in the near future. After this statement was made, in the cryptic community there was confusion as to what the term "sufficiently decentralized" according to the SEC meant. Has the XRP been decentralized enough?

The SEC later clarified what it meant to be "sufficiently decentralized". At last week's Consensus Invest, SEC President Jay Clayton said:

"When a value shop becomes truly decentralized – not a single person or group of people controls its provision or control of transactions or has access to asymmetric information – we said it is distributed and therefore it is not necessary to re-register those transactions,"

said SEC President Jay Clayton at Consensus Invest in late November. "

Clayton also explained that tokens and token networks can evolve in a different state over time. For example, a network could become more or less decentralized over the years. A token sale can be declared an offering of securities at the time of initial sale before turning into a commodity, for example, after being sufficiently decentralized.

Clayton was asked directly if XRP was a security. However, he did not respond directly. Instead, he talked about how the SEC is open to projects of all kinds and that more information is needed before making a specific decision on a token.

What do Ripple executives say about XRP?

Part of the problem with XRP and Ripple is that members of Ripple's executive team have made a series of problematic claims about the digital token in the past. These statements seem to suggest that XRP and Ripple are closely related in a similar way to traditional security.

One of the most infamous claims was made by Ripple's CTO, David Schwartz, on December 27, 2017:

"The higher the price of XRP, the more money Ripple produces by selling XRP, the more money is worth Ripple, the more power Ripple has to incentivize partners and so on."

Later, Schwartz was asked how OpenCoin works. OpenCoin was the predecessor of Ripple. Schwartz stated directly that the source of revenue for OpenCoin was the sale of XRP:

"We promote and develop Ripple in a highly successful open source decentralized payment system, and our revenue is the sale of XRP."

It is not just the CTO of Ripple that makes problematic statements. The co-founder of Ripple and former CEO, for example, said the following in 2013:

"Ripple was created by a for-profit company called OpenCoin, and this is the company I work for, we're kind of software producers, we're doing the protocol, our business model is that we're keeping 25% 39; existing XRP and we will use it to finance operations, repay investors, pay employees, this is our business model. "

Larsen added the following in an interview in 2014, clarifying the relationship between the Ripple protocol, XRP and OpenCoin:

"Therefore, with the growth of the protocol, since there is a limited amount of XRP, the value of XRP should increase, because it is required by market makers".

The value of Ripple increases by $ 600 million for every penny that increases XRP

One of the most worrying statements about the relationship between XRP and Ripple, however, was made by Schwartz in 2017 when he stated the following:

"Ripple contains over 60 billion XRPs Given the way it is deposited, Ripple will almost certainly be the biggest holder of XRP for the foreseeable future.For every penny the price of XRP goes up, the notional value of Ripple & # 39; s XRP rises to six hundred million dollars Ripple can only materialize that value for its shareholders if this value and liquidity are preserved in the coming years. "Of course, Ripple earns money by selling software to banks, but how many banks do you think Ripple should close? to make $ 600 million in license / support fees – that would be equivalent to a sustained increase in one cent of the price of XRP "

This statement clarifies how much XRP is held by Ripple (60 billion). It also clarifies how much Ripple quota has in the XRP value. As the value of XRP increases, the value of Ripple also increases.

Schwartz complicated things further when he said that in 2017:

"After all, the reason we're doing this is increasing the demand for XRP to increase the value we can extract from our XRP stock."

Yikes.

XRP is not technically a security or stock. However, it seems that XRP could work as one. The value of XRP seems to be closely related to the Ripple value. While Ripple continues to try to distance itself from XRP, it is clear that there are question marks that lie on the second cryptocurrency in the world by market capitalization.

You can read the full article by Larry Cermak explaining the connection between XRP and Ripple on theblockcrypto.com.