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Former CFTC President Giancarlo claims Ripple's XRP is not a security

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The security status of Ripple's cryptocurrency, XRP, has long been a gray area in the crypto space. The situation has been exacerbated by multiple class action lawsuits filed against Ripple, alleging that the blockchain payments company sold unregistered XRP as an unregistered security.

Former Chairman of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, has shared his opinion on the matter in an article prepared for the Journal of International Financial Law. In the article published on June 17, Giancarlo states that XRP is not a security. However, his opinion has raised doubts because he is financially connected to Ripple.

"XRP fails the Howey test and is therefore not a security"

Giancarlo served as the thirteenth CFTC president for a term that expired in April last year. While on commission, he was responsible for the decision that led to the classification of bitcoin and ethereum as commodities.

According to the Howey Test, an asset is considered a value if it involves a contractual agreement in a joint venture and the buyer expects future profits from the efforts of a third party or developer.

According to the former CFTC chief, XRP does not meet any of these requirements and therefore cannot be considered a guarantee. To quote Giancarlo directly:

"The mere fact that an individual has XRP does not create any relationship, right or privilege regarding Ripple. Ripple has not marketed XRP as an investment product, nor has it promised XRP holders any kind of return or benefit on investment. ”

Furthermore, it states that "Even if XRP meets one or two points of the Howey test, it does not satisfy all factors such that XRP is an investment contract subject to regulation as collateral."

Giancarlo then notes that the Stock and Commodities Exchange (SEC) has already given its guidance on the security status of other cryptocurrencies, but has not commented on the fourth largest cryptocurrency by market cap, XRP. In particular, the SEC has already removed Bitcoin and Ethereum from the securities rankings, but has remained silent on Ripple's native cryptocurrency.

Regardless, Giancarlo continues to debunk persistent concerns about Ripple's XRP holdings and cryptocurrency distribution. He also argues that just because XRP is not mined like bitcoin and ethereum, it does not change the way it is used as it has clear utility as a payment and settlement mechanism.

But does Giancarlo's opinion really matter?

What has most caught the attention of the cryptocurrency community about Giancarlo's arguments is his relationship with Ripple. In particular, he now works as a lead attorney at Willkie Farr & Gallagher, a law firm that Ripple hires. However, he claims to have "Confident in objective information" provided by Ripple in preparing the report.

Furthermore, he is no longer a CFTC official and as such cannot make a decision on XRP's security status. The pending court cases and the SEC are the only ones in a position to clear the air around the digital asset, as some cryptocurrency analysts have noted.

As Ripple has said before, XRP's classification as security could have dire consequences on the XRP market and on Ripple, the company. Therefore, it can be assumed that Giancarlo's report is supposed to be a solid argument for XRP before the SEC, which has the final say in this matter. However, her relationship with Ripple raises some serious questions.





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