Ripple’s XRP and Ethereum’s Ether should be categorized as non-compliant securities. This is according to former Wall Street veteran and Commodity Futures Trading Commission (CFTC) head, Gary Gensler. Gary, who also served in the Obama administration as a top financial advisor believes that Ether and XRP have most likely been traded in violation of US securities regulations. However, he believes that Bitcoin can remain exempt from these security regulations.
Gary has been a prominent figure in the financial services industry having been the head of the CFTC from 2009 to 2014. The CFTC has been working with the SEC to come up with a regulatory framework that will govern the cryptocurrency industry but the efforts are yet to come to fruition. The two agencies have also been working on the very hotly debated issue of whether cryptos should be categorized as securities or not. He has served in various other high-level capacities such as a partner at Goldman Sachs and the finance chief for Hillary Clinton’s 2016 presidential campaign.
In an interview with the New York Times, Gary explained that the reason he does not classify Bitcoin as a security is because it was not issued via an initial coin offering and it has a decentralized network of developers. As for Ether and XRP, there is a strong case about them being considered securities, and particularly XRP.
Ripple’s leadership has been adamant that XRP is not a security. Earlier this month, Ripple’s chief market strategist Cory Johnson sought to set the record straight in an interview with CNBC.
“We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law.”
The classification of XRP as a security would have far-reaching consequences. For one, it would be illegal for Americans to trade XRP on most of the exchanges which offer them currently. This would be catastrophic especially for its price as the demand would be driven down greatly.