The conflict between the US Securities and Exchanges Commission (SEC) and one of the country’s biggest crypto firms, Ripple, is coming to a head, leading exchanges worldwide, comprising American giant Coinbase, to halt the XRP token. The SEC has marked XRP security and has launched a conceivably crushing lawsuit against Ripple.
Ripple has detailed that it is up for the battle. In an ardent defense of the token just ahead of Christmas, Ripple CEO Brad Garlinghouse guaranteed that it’s anything but security and that “numerous other G20 governments consider XRP a currency,” driving him to the conclusion that “it is really bewildering that the SEC would make this stride.”
But just how credible is this claim? Do “many” G20 nations hold this view? We decided to find out.
We’ve found no evidence of any Argentinian regulator saying anything in particular about XRP. Crypto legislation is very much in its infancy in Argentina.
A New South Wales judge ruled this year that crypto could be used as a legitimate form of investment, saying that bitcoin (BTC) could be “used as a security” and was a “recognized form of investment,” according to the Australian Associated Press. But there is no apparent link to XRP in this ruling – or any other that we could find.
Ripple has a significant presence in Brazil, but it doesn’t look like anyone in a power position has ruled on XRP’s legal status.
Cryptoassets are policed under securities laws in Canada, with no known exemption for XRP. The country’s Currency Act of 1985, last amended in 2018, only specifies that Canadian dollars are legal tender.
Crypto’s name is mud in the Middle Kingdom – at least officially.
The situation is more nuanced in France, where the central Bank of France has spoken about XRP’s possible role in powering central bank digital currencies (CBDCs), according to Fr24. Still, we were unable to unearth anything official about its “currency” status or otherwise.
The picture in Germany is confusing. This super long document from the financial regulatory body the Federal Financial Supervisory Authority (BaFin) goes into great detail in its discussion of security tokens specifically and other tokens, listing the laws applicable in various scenarios. Crucially, however, the regulator refrains from making mention of any particular token. For the TL; DL crew, the answer is a resounding maybe, but nothing close to a firm “yes.”
No records or rulings are found here.
Indonesia has several crypto-related regulations, but we couldn’t find any record of a ruling on XRP’s legal status.
Crypto still does not have legal tender status in Italy, and no references to XRP were found on our searches.
Japan is arguably way ahead of the rest of the world when it comes to crypto regulation, all carefully policed by the regulatory Financial Services Agency (FSA). The FSA approves tokens for listing on exchanges, regularly going into great detail on individual altcoins’ legal status. Ripple’s closest Asian ally is the Japanese financial giant SBI, which this week issued a statement pointing out that “XRP is a ‘cryptoasset’ under the Japanese Funds Settlement Law and not a ‘security’ under the Financial Instruments and Exchange Act.”
Although sources familiar with the matter told Cryptonews.com that the government might seek to adopt a policy of token approval for exchanges at an unspecified future date, Seoul has remained silent on the subject.
Ripple’s remittance solutions have proven a hit in Mexico, but we couldn’t find any official ruling on its status as a “currency,” a “security,” or anything else, for that matter.
Russia’s crypto legislation and rulings on tokens are confusing and mired in ambiguous terminology. But nothing specific to XRP was found here either.
No luck here either, Brad.
But finally, we have something in the UK. In 2019, the British financial regulator, the Financial Conduct Authority, wrote in a consultation paper,
“Tokens may have mixed features that may overlap with [utilities tokens, exchange tokens, and securities token] categories, or change over time. For example, ethereum (ETH)] can be used as a means of ‘payment’ (exchange token) on the Ethereum platform, and can also be used to run applications (utility token). XRP has similar features.”
Garlinghouse sees this as a resounding victory and proof that the FCA doesn’t deem XRP security.
He informed CNBC earlier this year,
“The FCA took a leadership role in characterizing how we should think about these different assets and their use cases. The outcome of that was a clarity that XRP is not a security and is used as a currency. With that clarity, it would be advantageous for Ripple to operate in the UK.”
Well, the less said about this, the better.
EU law doesn’t have much to say on XRP yet. Still, its securities markets regulator, the European Securities and Markets Authority (ESMA), has been humming and hawing over the matter for months. Although it came close to a breakthrough in January last year, it looks like the jury is still out.
2/20 (sort of), although XRP proponents might want to quarrel with a few of these verdicts, and a few of them don’t seem decisive enough. And, of course, there may be rulings our searches failed to uncover.
Nevertheless, some may claim that it’s a bit of a semantics stretch to claim that “many” G20 nations think of XRP as a “currency.”
However, other economic big-hitters outside the G20 have clear stances on XRP. These include Switzerland, where authorities including the Swiss Federal Tax Administration have included XRP on lists of “cryptocurrencies,” as cited by the Library of Congress-compiled data.
And in Asia, Singapore’s International Commercial Court has ruled that cryptoassets have intangible property status. Lexology also pointed out that cryptoassets “are legal under Singapore law,” and Ripple has publicly spoken about both countries’ recognition of the non-security status of its XRP token.
This all provides further support for its claim that, at least now, not everyone agrees with the SEC’s verdict. And it supports the claim, more recently made, that “there are clear rules of the road for using XRP in the UK, Japan, Switzerland, and Singapore.”
But does 2 out of 20 (plus a few other non-member states) constitute “many G20 countries”? Readers will have to be the judge.
Ripple did not respond to our request for comment.