Gary Gensler, the former director of the US Merchandise Futures Trading Commission, recently announced at the MIT Blockchain Conference that regulators have a “strong case” against Ethereum (ETH) and Ripple (XRP) cryptocurrencies. A case that aims to clarify the classification of these two digital currencies, because apparently there are those who claim that they are “unregistered financial values”.
Ripple (XRP) and Ethereum (ETH) should be considered values by the way in which they were issued
In the case of XRP, the currency is created by a central organization. ETH, on the other hand, was issued through an ICO (Initial Currency Offer), according to Gensler. These qualities, he says, are framed within the vision of issuing and trading shares of a company.
The representatives of Ripple and Ethereum Foundation have publicly rejected that XRP and ETH cryptocurrencies are financial values. Similarly, the researcher and lawyer Peter Van Valkenburgh believes that Gensler is not taking into account the evolution of these cryptocurrencies.
According to Van Valkenburgh, the Ethereum Foundation of 2014 and the actual company are currently distinguishable because, although the ICO carried out four years ago can adjust to the status of financial value, the way in which the network works at this time it has changed radically.
Ripple company denied having a direct influence on the Ripple (XRP)
However, the connection of the Ripple company with the cryptocurrencies market worries several exchange houses, as the Securities and Exchange Commission (SEC) warned that all cryptocurrency exchange platforms that accept assets rated as securities must be subject to the corresponding legislation.
Currently, the classification of cryptocurrencies as financial values in the United States is shallow. This is why we must take into account that Gensler’s statements take place in a complicated legal landscape and with an imprecise use of terms.
The verdict on the classification of these two cryptocurrencies is still uncertain, however, there are indications that the SEC might be receptive to Gensler’s argument. A possibility that could mean the illegalization of the use of both Ethereum (ETH) and Ripple (XRP) in all the cryptocurrency exchange houses that are not registered with the SEC.
Jackson Bey was born and raised in Lethbridge Alberta but moved east when he was 22. Apart from running his own consulting firm. Jackson spends his time canoeing the many lakes of Ontario. As a financial journalist Jackson has published stories for CBC Business Online, as well as Buzz Feed and Motherboard. As a contributor to Billionaire 365, Jackson mostly covers markets and trade.