Lately, there has been lots of debate on whether ripple (XRP) is a security or not. Speculation is that this could be the reason why Coinbase has not yet listed XRP, despite it being the third largest cryptocurrency by market cap. However, if you look at the whole issue critically, XRP being declared a security is nothing but FUD. That’s because there is actually no basis to support such a move by the SEC.
First, XRP was created before ripple the company. This means that ripple (XRP) was never a means of raising capital for ripple the company, like a normal security would do. The only connection between the two is that both were formed by the same people, and ripple the company owns a large amount of XRP. Technically, ripple the company would have used any other cryptocurrency and not XRP. That would not have made the crypto they chose a security. Trying to correlate this with holding a stock in a company like say Apple is a stretch.
On top of that, ripple (XRP) holders have no stake at all in ripple labs. Holding XRP does not give you the right to vote, or share in the profits of this company. In essence, the developments of ripple labs have absolutely no bearing on ripple (XRP). That’s quite different from owning stock in the traditional sense. Assuming you own some shares of Apple and the company declares a huge dividend payout at the end of the year. This would make you extremely happy. You would be happy because you would get a piece of these profits. On the flip side, this does not apply to holders of XRP. If ripple labs announces some huge profits today, with an equally huge dividend payout, there would be nothing for a ripple (XRP) investor to celebrate. That’s because such an investor holds no stake in ripple labs, and the profits of ripple labs have no benefits whatsoever to such an investor.
The other issue is that of utility. The XRP token has a utility in making cross-border payments faster. That’s not something that one can do with a traditional stock. A traditional stock has no utility other than raising money for the company, and giving a dividend to the investors.
Besides, if ripple (XRP), were a security, ripple’s key people would already be in the know and would be sending signals about it. That’s because ripple has people in key bodies in the U.S including the Federal Reserve. These are strategic bodies that would know way in advance if ripple (XRP) were about to be declared a security. So far what we have seen is Brad Garlinghouse becoming more bold asking exchanges like Coinbase to list XRP. If he knew for sure that XRP was about to be declared a security, he wouldn’t be that bold. It’s time to drop the FUD and let XRP thrive. Ripple (XRP) is about to change the world as we know it.