Category: Security

XRP ‘Absolutely Not’ A Security Says Ripple Chief Market Strategist

Corey Johnson, Ripple’s Chief Market Strategist, put suspicions to rest that XRP was not listed on Coinbase due to its status as a security.

Ripple Foundation’s chief market strategist Corey Johnson said that XRP is not a security in an interview, CNBC reports April 12.

Johnson told CNBC Wednesday that Ripple was not a security as to allay speculation that XRP had not been added to cryptocurrency exchange Coinbase due to questions over its status. Johnson said, “We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law.”

Coinbase and Ripple had discussed the possibility of adding its cryptocurrency XRP to the exchange, but according to Johnson, they did not broach the topic of XRP’s status with regulators. Johnson said:

“Coinbase never ever raised the issue of whether or not XRP is a security in our discussion about listing XRP. We’re 100 percent clear, it’s not a security. We don’t meet the standards.”

Coinbase also told CNBC that they did not discuss regulations with Ripple, and that their conversations revolved around more broad criteria for adding assets to the exchange.

Classification of digital assets either as securities, property, or currency is difficult in the US, as the government is yet to develop a clear regulatory structure. In an interview with Cointelegraph in March, CEO of Ripple Brad Garlinghouse said that Ripple has always strived to work with governments:

“We were from the beginning really looking at how we work with governments, how we work with banks. And I think some in the crypto community have been very much, ‘How do we destroy the government. How do we circumvent banks?’… I think that has differentiated us and I think ultimately governments aren’t going away. In my lifetime, I don’t think that’s happening.”

Yesterday, Ripple invested $25 mln worth of XRP into the Blockchain Capital Parallel IV LP venture fund. Ripple hopes the new investment will “provide an opportunity to examine new use cases for the XRP Ledger and Interledger Protocol.”

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Philippines’ SEC Demands Crypto Cloud Mining Contracts To Be Registered As Securities

The Philippines’ SEC issues an advisory on Crypto Cloud Mining Contracts that applies the Howey Test to define them as securities.

The Philippines Securities and Exchange Commission (SEC) issued an advisory on Cryptocurrency Cloud Mining Contracts that applies the Howey Test to classify these contracts as securities, the SEC outlined April 10.

Cloud Mining contracts fall within the purview of securities law because they are “investment contracts,” whereby investors stake the mining capacity of a remote datacenter through the contract, which can itself then further be traded.

Applying the 71-year old Howey Test, this qualifies as an investment in a “common enterprise,” in which investors are led to “expect profits” that are “generated from the efforts of others.”

The Philippines’ SEC advisory requires all brokers, dealers, salesmen or recruiters involved in “enticing the public” to invest in these contracts to obtain registration or seek an appropriate license. Failure to do so will henceforth be regarded as an “unregistered issuance of securities” liable to criminal prosecution, with a maximum penalty of 21 years’ imprisonment.

In late 2017, the Philippines’ SEC announced plans to classify ICOs under the Securities Regulation Code. Earlier that year, the Philippines’ central bank, Bangko Sentral ng Pilipinas (BSP), recognized Bitcoin as a legitimate payment method, and started processing license applications from the country’s crypto exchanges.

BSP deputy director Melchor Plabasan clarified the twofold approach the country’s financial regulators are taking towards cryptocurrencies and related assets, seeing them as both monetary and investment instruments.

In March 2018, a Philippine senator filed a bill to impose stricter penalties for crypto-related crimes, citing corruption, money laundering, and the financing of terrorism as her main concerns.

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