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Ripple and regulations: The survival of the fittest, results expected shortly

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Ripple XRP
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As you probably know governments regulate (sometimes very heavily) all institutions and companies doing business in the financial sector. Seeing how those very companies have sunk the planet in three world economic recessions over the last few decades, there are those who argue that such regulations are not substantial enough (or enforced enough).

Cryptocurrencies, on the other hand, are not regulated at all for the most part. Some national governments, mainly in Asia, are starting to see the writing on the wall and acting accordingly but in Europe and the Americas, the cryptosphere remains utterly anarchic. But as accusations of being a security fall on some cryptocurrencies, mainly Ripple (XRP), the proper authorities everywhere (at least in the United States) will have to take a stand.

That could or could not prompt, at last, some regulations but it could also be that the competent authority (the SEC in this case) will limit itself to determine if any given digital asset must be considered to be a security or not. The cryptosphere is, thus, at a crossroads.

The SEC authorities have already declared both Bitcoin and Ethereum not to be securities and they also have given guidelines (not to be confused with actual decisions) about how they think they will assess the financial nature of each crypto coin.

In the end, it boils down to this: every cryptocurrency that starts life through an ICO could be considered to be a security as ICOs promise, at least implicitly, a profit for the participants. Every other coin will not be considered an asset but as something more or less alike to a fiat currency.

The good news is that SEC is not very eager to interfere in the crypto world; they are somewhat willing to laissez-faire, at least as long as things don’t go out of control, one should assume.

The bad news is that Ripple’s XRP is still under a lawsuit for allegedly being a security and it is probably casting a shadow over the whole project and, by extension, over the cryptocurrency markets. Because of the significant momentum Ripple and XRP have been gathering lately, this is a particularly important case so it behooves us to have a closer look to this situation and try and figure out what we should expect as an outcome.

SEC cannot name Ripple’s XRP a security

This dish has two main ingredients: what the government can or will do and what Ripple can or will do. Let’s start with the government. The first thing we need to be entirely clear about is that no lawsuit can determine the nature of any financial instrument or asset. Or in plain English, only the SEC can decide if something is a security, no judge or court of law has the legal power to make that decision. So our first ingredient is, in fact, quite simple.

It all comes down to a choice made by the SEC. The question is how likely is it to declare Ripple’s XRP a security? Not much, probably not at all.

The main reason for this is that XRP has never had an ICO. Every single XRP token already exists because it was pre-mined by Ripple Labs before it went live, so it doesn’t even require miners the way Bitcoin and others do. Since SEC has already stated that its main standard will be the precedent of an ICO, XRP should be pretty safe.

Now for our second ingredient. Ripple can’t directly affect SEC’s decision, of course. The financial nature of both Ripple Labs and the XRP currency was determined years ago, and it can’t change overnight.

It doesn’t need to change, anyway. But Ripple is scrambling and tweaking a few things to ensure that the difference between the company and the coin becomes apparent both for the authorities and the public so that any possible doubt is clarified easily.

Let’s review a few of the measures Ripple Labs is taking to achieve that goal

Mr. Brad Garlinghouse (Ripple Labs CEO and former Uber driver) has been explaining extensively at every possible opportunity (interviews, conferences, lectures, etc.) that the company and the coin are not identical.

In a dramatic statement that he repeats frequently, he explains that if Ripple labs went away, XRP would still stay around as a viable cryptocurrency because all the infrastructure needed for that is already in place, it’s decentralized and is not owned by Ripple Labs in any way.

Ripple Lab’s chief cryptologist, David Schwarz is not the chief cryptologist anymore. He’s now the company’s CTO, but we all suspect the actual job he’ll keep doing is precisely the same. So why to rename the same position? Well, there’s an excellent reason, and it has to do with distancing the company from the token. Almost every big company has a CTO. For instance, even Walmart has a CTO, believe it or not.

So this is a standard executive position in the corporate world. Chief cryptologist, on the other hand, is a position that almost no other company in the world has.

Even within the software technology industry, have you ever heard about Microsoft’s Chief Cryptologist? Or Google’s, Oracle’s or Amazon’s? The very job title “chief cryptologist” suggests too close a relationship with XRP. That’s why Mr. Schwarz now has a “new” job.

Less than a month ago, Kahina van Dyke was snatched from Facebook to become Ripple’s vice president of business and corporate development. She is a woman who spent decades in Wall Street before becoming Facebook’s global financial services team leader.

The standard interpretation for this move is that this is a skilled person who already has all the contacts Ripple needs so that more banks and financial institutions adopt the Ripple ledger quickly.

And that could very well be the case. But almost nobody has noticed another critical fact. Mrs. van Dycke, with her extensive experience leading financial development teams and dealing with regulators, could also be the ideal person to advise the company on how to get rid of the “security” problem once and for all.

Maybe the most significant problem Ripple faces will be to prove that XRP is as decentralized as, say, Bitcoin and that the immense amounts of XRP tokens that Ripple still holds will not give it undue power over the coin’s performance.

But then again, we go back to the main thing: Ripple has never promised anybody they would make a profit by buying or holding XRP coins, and it never held an ICO.

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” This quotation is (falsely) attributed to Charles Darwin who never once wrote it or said it. Still, it does capture the essence of evolutionary theory and presents a valid idea in a pithy way. It’s the survival of the fittest, with fitness understood as adaptability.

Make no mistake. Ripple Labs has the Bitcoin and Ethereum precedent on its side, and it fits SEC stated criteria not to be a security. But if that wasn’t enough, you have to see that Ripple is, indeed, adapting to survive and that, alone, will make it prevail. And as things are more evident to every now (including SEC I believe), the results of the exhausting Ripple SEC battle are just around the corner of finding a seat.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.

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Bitcoin

Investors Beware: Another Large Bitcoin Crash Might Be Coming

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The crypto prices have surged quite high in the last few months. Of course, their progress is nowhere near the one seen in 2017, but they appear to be getting there, one day at the time. However, things might not be as simple as that, and according to recent performance — it is more than possible that a major Bitcoin crash is incoming.

The fact is that cryptos saw a massive amount of growth in a very short period. Bitcoin itself more than doubled its price in only two months. Now, the rally is starting to crash in on itself, and the coin is already about $1,000 lower than last week. If such development does come to pass, a lot of people will experience quite large losses, although experienced investors might find some opportunities, and leverage in order to enhance their holdings’ long-term value.

For example, Bitcoin dominance is expected to crash very quickly, which will work in favor of quite a lot of altcoins. While this does not seem to be the best time to invest in BTC, altcoins are another story, and diversifying a portfolio now might end up being very profitable in days to come.

Bitcoin behavior mirrors the pre-bear market situation

The crash that analysts are predicting right now comes as a direct consequence of all the hype that has been building up in…

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Altcoins

Top 3 Coins to Buy Before They Go Big

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Crypto bulls are back, that much is clear. The long-lasting, harsh crypto winter is gone, and the new era in digital currency sector opens up some rather interesting opportunities. With many more bull runs expected to come in months ahead, a lot of coins are likely to blow up and maybe even hit new all-time highs, although that still remains purely theoretical.

On the other hand, the fact is that numerous coins are seeing prices that were not achieved since early 2018, and the overall momentum remains bullish. With that in mind, even if new records do not come for a very long time — chances are that many of the coins will blow up enough for investors to see some serious gains in months to come. As a result, investing in some of these coins now might be a very profitable decision, for those who have the patience to wait a few months. Here are some of the projects believed to have the greatest potential to go big in the second half of 2019 and beyond.

1. TRON (TRX)

Putting TRON on the list should not really surprise anyone, as the project constantly comes up with new project updates, partnerships, and alike. It also constantly breaks records, as is becoming one of the biggest players in the dApp and smart contract development sector.

In the past few…

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Blogs

Can Crypto Credit Cards Disrupt the Fight Against Financial Crime?

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crypto credit cards
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It is commonly known that the world of finances has the biggest problem with the crime of all existing industries around the world. It has been so throughout history. While the financial world has evolved, so did the criminal activities, and they continue to be an issue. With the arrival of cryptocurrencies, many were hoping that financial crime might be disrupted. However, for now, at least, it appears that cryptos themselves cannot find a way to resolve issues such as international money laundering.

In fact, when it comes to money laundering, the crypto sector appears to be the weakest link, especially because of the nature of digital currencies. The anonymity that cryptos are being praised for means that anyone can get a payment from an unknown source from anywhere in the world. This method can then be used for financing drug trafficking, cyberattacks, terrorists, and more.

Until recently, it was not easy for bad actors to make use of cryptocurrencies obtained for illegal purposes. The number of merchants willing to accept the coins was low, and criminals were forced to find a way to exchange crypto into fiat currencies. However, this came with a set of issues, such as taking foreign exchange risks and then sending the money through wallets and exchanges to a banking system that would allow withdrawal. The banking account was the biggest obstacle here,…

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