XRP is not a security. And as Garlinghouse explained, “XRP is not a security for three reasons: if Ripple, the company, shuts down tomorrow, the XRP ledger will continue to operate; it’s an open-source, decentralized technology”.
The third-largest cryptocurrency’s categorization has always been a bone of contention. In what could be termed as a breath of relief for the community, the recent FCA consultation paper noted that Ripple’s XRP exhibits qualities of both utility as well as exchange token.
“Tokens may have mixed features that may overlap with the above categories, or change over time. For example, Ether can be used as a means of ‘payment’ [exchange token] on the Ethereum platform, and can also be used to run applications [utility token]. Ripple has similar features.”
Following the published report, Ripple CEO Brad Garlinghouse applauded the UK regulators for recognizing XRP as a token which possesses hybrid exchange/ utility token asserting similarities to ETH. As Ripple’s attempts to draw a clear definition of XRP’s narrative was still in the works, a famous crypto forum ignited a fresh debate on the same issue. In a keynote speech by Pavel Matveev, Co-Founder, and CEO, of the payment platform Wirex explained the different classification of digital tokens at the Barcelona Trading Conference 2019. He stated,
“.. so XRP is a good example here which is a purely security token but is trying to be a payment token.”
The CEO’s comment stating that XRP was a security token contradicted Wirex’s statement in a press release last year which said: “Like Bitcoin, Ripple is both a P2P payment network and an altcoin. The platform and protocol are known as Ripple, while the payment token is XRP”
While the XRP community has managed to win the hashtag war, the token itself couldn’t escape the classification battle. The community was pretty disappointed with the CEO’s pronouncement. Many XRP proponents also commented on the recent Wirex and Stellar network [which is XRP’s rival] collab, while one user called it “a poorly-timed joke”. A Twitter user, @GerardAzar, called out Matveev and tweeted,
“@wirexapp Selling 101 – you don’t denigrate others when selling your product, because when you do, you denigrate your own product. Seriously, if XRP is a security then please tell me how the token gives me any rights over Ripple? @JoelKatz @sentosuemsaba”
At the time of writing, there were no reactions from the Ripple execs.