SNEAK PEEK
- XRP’s utility on the XRPL distinguishes it from traditional investments.
- XRP’s intrinsic value lies in facilitating transactions and rewarding validators.
- The debate highlights global disparities in the classification of cryptocurrencies.
As the landscape of cryptocurrencies continues to expand, the legal definitions and frameworks that govern them are coming under increased scrutiny. A fascinating debate between Bill Morgan and Marc Fagel on Twitter brings to light these evolving issues, specifically regarding Ripple’s XRP. The conversation hinged around a critical question of whether XRP is a security.
I realise that Marc but the instrument on a layer 1 blockchain itself such as XRP the XRPL has a utility that has nothing to do with investing. A native layer 1 crypto pays transaction fees or rewards validators who secure the network. It doesn’t need to be offered or sold. /1 https://t.co/IBd1VWt5La
— bill morgan (@Belisarius2020) June 2, 2023
In the discussion, Morgan emphatically argues that the underlying utility of XRP, derived from its layer 1 blockchain, the XRP Ledger (XRPL), is not confined to investment purposes. He insists that the intrinsic value of this native crypto lies in its ability to facilitate transaction fees or reward validators that fortify the network.
Moreover, Morgan emphasizes that XRP doesn’t need to be offered or sold. Instead, it could be freely distributed, a sentiment reflected in the SEC’s summary judgment, which acknowledges this ‘limited’ utility. This model allows XRP to serve its function, irrespective of being sold or offered by an issuer.
They could all be given away and not sold by an issuer. Even the SEC in its summary judgment material has recognised this native (inherent) utility for XRP although it calls it a ‘limited’ utility. If I buy a product with XRP such as a cap which I did once to test its speed/2
— bill morgan (@Belisarius2020) June 2, 2023
Morgan uses an example of purchasing a product with XRP to elucidate his point further, noting how a fraction of the XRP was ‘burnt,’ or permanently removed from the circulating supply. This transaction underlines XRP’s functionality, refuting the claim that it can be considered a security.
As per Morgan’s perspective, even without an established market, XRP’s functional utility can’t be denied, likening it to a stone that can be weaponized, thereby gaining utility. He asserts that XRP, devoid of being sold or offered, is not a security, challenging the prevailing views of the SEC.
By contrast, Morgan commends the UK Law Commission’s understanding of XRP, arguing that it’s more akin to a type of property rather than a security. This perspective introduces a broader global perspective on crypto regulation, suggesting that the SEC’s view is not universally accepted.
