Is Bitcoin A ‘Security’: Here Is What The SEC Thinks


Introduction

Ripple is one of the most valued enterprises in the Crypto industry. This Monday evening, they announced that they are about to be sued by the SEC (Security and Exchange Commission). According to the SEC, Ripple has been a part of the alleged unlicensed sales of securities.

The lawsuit also named Ripple’s CEO Garlinghouse and CO-Founder Larsen as defendants. This action will go through years of debate whether Ripple, a digital currency, is a security or a currency. Ripple CEO has predicted this outcome after Biden winning the US presidential election.

Is Bitcoin A Security?

The SEC has clarified the fact that Ripple is not a security. SEC has come to this reasoning because Bitcoin and Ethereun do not have any physical presence. They are decentralized in nature and have no person or company to support them.

XRP is different from these two Cryptocurrencies. XRP is not produced with the process which can be used by visiting https://bitcoin-pro.app. In fact, Larsen had already created more than $100 billion worth of XRP in 2012. Some of these currencies are in the market, and some are stored in the form of reserved.

Garlinghouse and Larsen are believed to own massive XRP. This has given rise to the concept of them sowing shares of their company and not currencies.

Ripple has always pushed the notion that XRP is a security. Also, the company added that they have no intention of touching the observed for their personal gains. The XRP is being used as a bridge to make an international payment. This practice has made the XRP decentralized in nature.

The matter between SEC and Ripple became worse when Garlinghouse struck a national note saying that Bitcoin and Ethereum had been created in bulk in communist China, while Ripple is an American Company that has performed the same.

What Does The SEC Chairman Think?

In the recent talk with SEC chairman Jay Clayton, he clarified the fact that Bitcoin is not a Security. According to him, Cryptocurrencies are the replacement of the traditional fiat currencies like Yen, Dollars, Euros, etc., But they never come close to being a replacement of security.

Jay Clayton’s assessment needs to be highlighted because there has been a notion that Cryptocurrency’s regulations are focussed on their status of security.

In the interview, he commented that it is wrong to consider Ethereum and Ripple (Second and Third Most used Cryptocurrencies) as securities.

No Reprieve On Ethereum Tokens

Bitcoin has a clear status as a currency. However, when it comes down to Ethereum, there is a fog that lingers around its status. People are still confused about whether Ethereum is currency or security.

In the CNBC interview, SEC’s Chairman was clear about his agency regulating Crypto tokens. Based on his stance on Ethereum and Ripple statuses, it seems that he is not ready to back down on his words. Clayton will not do any violence against the companies, but he intends to stick with the security norms. According to him, the security market of the USA was built on similar rules.

When Crypto Asset Is A Security?

There are several ways in which a Crypto asset are considered securities. However, we think that the following are the most viable options.

  • Traditional equities and debt securities have been digitized recently. As we can see, they are clearly securities. They are represented on the distributed ledger. Hence, their status of being securities remain intact.
  • If Cryptocurrency is used as a financial instrument for investing money, it will be considered a security.
  • A Crypto asset can be considered a security if there is a potential for profit.

Take Away

Distinguishing the regulation of the different types of assets is the best way to find whether a Crypto asset is a security or not. Now you know how a Crypto asset can be called security or how you can segregate them into security and currencies.

After the SEC’s Chairman commented on Ripple and Ethereum not being securities, people now can draw a much clear line around the whole concept.

Jeff Campbell

Jeff Campbell is a husband, father, martial artist, budget-master, Disney-addict, musician, and recovering foodie having spent over 2 decades as a leader for Whole Foods Market. Click to learn more about me

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