- US-based regulations want to consider XRP as security and not as a currency
- Ripple had been in a battle with the US authorities and its investors
Brad Garlinghouse, CEO of Ripple, a US-based financial technology company, in an interview, stated that the company is looking into the possibilities to move out their head office from the US. Ripple is facing problems over the regulatory environment in the US.
What’s the Actual Problem?
The US-based regulations want to consider XRP as security and not as a currency. Brad told CNBC that similar conditions don’t apply in the UK, where the watchdog the Financial Conduct Authority (FCA) doesn’t seem XRP as a security. Countries like Japan, Switzerland, Singapore, and the UAE holds the opinion of Japan.
What Will Happen if XRP is deemed a Security?
In general, the US securities are considered to be bonds or stocks and, by the law, comes under the centralized governance of the country and its regulations. This will also lead to Ripple under the obligation of complying with fiduciary regulatory giving indirect control to the shareholders of Ripple over the decisions of the company. And holding XRP for Ripple in such a scenario can be a disastrous security concern.
How are Ripple and XRP different?
Yes, Ripple and XRP are different and share a common name. Ripple is an open-source protocol that consists of RippleNet and Ripple Consensus Ledger (RCL).XRP, on the other hand, is the native token of RCL and is mainly used as a facilitator of exchange and transfer of money across currencies and networks.
Ripple in a Battle with the US
For some time, the Ripple had been in a battle with the US authorities and its investors. Ripple is being alleged to comment misleading statements about XRP and also for selling unregistered securities. The US Security and Exchange Commission (SEC) doesn’t consider cryptocurrencies like Bitcoin and Ethereum as securities.
Suppose XRP is deemed as security by the SEC. In that case, it will bring XRP under new rules, and Ripple, who claims to be independent of XRP but holds 55 billion circulated XRP tokens out of a total 100 billion, will be under the security of the centralized government.
This is not the first instance when a Ripple’s high ranking official has commented about shifting their headquarters out of the US. Previously, Co-founder Chris Larsen expressed similar views to the Fortune magazine.