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Ex-CFTC Chairman w/ Ripple as a Client Argues XRP is Not a Security

Fredrik Vold
Last updated: | 2 min read

As the debate continues over whether XRP, the cryptocurrency affiliated with US-based fintech company Ripple, is or is not a security, a former US financial regulator is the latest person to join the discussion. However, there now exists a business connection between the ex-regulator and Ripple.

Source: Adobe/Tierney

In an op-ed published in the International Financial Law Review on Wednesday, Christopher Giancarlo, a former chairman of the US Commodity Futures Trading Commission (CFTC), laid out his arguments as to why XRP is not a security according to a framework known as the Howey test, but instead resembles a currency.

“Ultimately, under a fair application of the Howey test and the SEC’s [the US Securities and Exchange Commission] presently expanding analysis, XRP should not be regulated as a security, but instead considered a currency or a medium of exchange,” the op-ed said.

It goes on to explain how XRP acts more as a substitute for fiat currencies:

“The increased adoption of XRP as a medium of exchange and a form of payment in recent years, both by consumers and in the business-to-business setting, further underscores the utility of XRP as a bona fide fiat substitute.”

Furthermore, the piece argued that XRP – just like bitcoin (BTC) and ethereum (ETH) – is “sufficiently decentralized to avoid regulation as a security.”

It also added that XRP “cannot be an investment contract as there is no contract or arrangement to speak of between Ripple and the overwhelming majority of XRP holders.”

A detail to take note of regarding the op-ed, however, is that Giancarlo now works for the New York-based law firm Willkie Farr & Gallagher, which Ripple is a client of. This was also admitted in the op-ed, which said that Willkie is counsel to Ripple “on certain matters” – but also that Ripple provided information that helped in the writing of the op-ed.

The piece was co-authored by Conrad Bahlke, a commodities lawyer at the same law firm.

As previously reported, Ripple has been sued by XRP investors who argue that the token should be considered a security. However, the claims have also been repeatedly denied by Ripple.

Most recently, Ripple was sued by a company called Bitcoin Manipulation Abatement LLC in May this year, after it was accused of conducting an “unregistered offer and sale of securities” during XRP’s initial coin offering (ICO).

XRP is currently (10:15) trading at USD 0.19, having dropped 1.09% in a day and 4.66% in a week.


Learn more:
XRP the Best Performer Today; Ripple Dismisses Securities Suit Again
Ripple Asks for Dismissal of XRP Lawsuit; Repeats XRP isn’t a Security
XRP Market Ignores New Lawsuit Against Ripple