The XRP Community Celebrates Recognition of XRP as a Utility Token
The European Corporate Governance Institute (ECGI), a renowned European think tank focused on corporate governance, has published a research paper that acknowledges the utility token status of XRP. This distinction is significant as it sets XRP apart from securities, which is at the center of an ongoing legal battle between Ripple Labs, the company behind XRP, and the US Securities and Exchange Commission (SEC).
XRP vs. Security Label
The ECGI paper, titled “Corporate Governance Meets Data and Technology,” delves into the evolving landscape of token offerings in the blockchain industry. Written by academics Wei Jiang and Tao Li, the report explores various fundraising methods like Initial Coin Offerings (ICOs) and Security Token Offerings (STOs). A key focus of the paper is the regulatory ambiguity surrounding token classification and whether specific tokens should be categorized as securities.
The researchers highlight the SEC’s lawsuit against Ripple as a prime example. The SEC argues that XRP is a security, alleging that Ripple’s sale of XRP violated US securities laws. However, the ECGI paper draws attention to a crucial detail often overlooked in mainstream media coverage: a court ruling in July 2023 determined that publicly traded XRP on exchanges is not a security. This finding serves as a potential counterpoint to the SEC’s claims and offers regulators a real-world case study on how to classify cryptocurrencies.
Beyond the Lawsuit: A Broader Impact for XRP
The recognition from a prestigious institution like ECGI has implications beyond the ongoing SEC lawsuit. By acknowledging XRP’s utility token status, the paper lends credibility to arguments that XRP serves as a medium of exchange within the RippleNet payment network. It facilitates faster and more cost-effective cross-border transactions, which could lead to increased adoption of XRP by financial institutions seeking efficient international payment solutions.
Market Jitters Amidst SEC Deadline
Despite the positive news from ECGI, the XRP market continues to experience price fluctuations. The recent decline, with XRP currently trading around $0.61, is likely a result of a broader correction in the cryptocurrency market.
XRP has dropped nearly 5% today and has been in retreat since reaching its highest point of the year at $0.7440 earlier this week. Adding to the market uncertainty is an upcoming deadline on March 22 for the SEC to publish its opening brief regarding remedies in its lawsuit against Ripple. This deadline coincides with the decrease in XRP’s price and a broader retreat in cryptocurrency markets.
Hot Take: Recognition Boosts XRP Community
While the legal battle with the SEC remains unresolved, the recognition of XRP’s utility token status by a respected institution like ECGI is a significant win for the XRP community. It underscores the potential role of XRP within the global financial landscape and brings legitimacy to its use as a medium of exchange.
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