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

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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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Altcoins

KaratGold Proves Its Business Model By Providing Official Documents

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There has been a lot of renewed enthusiasm in the cryptocurrency market thanks mainly to Bitcoin’s strong move about 10,000.  Although Bitcoin continues to show its dominance, the altcoin market has yet to benefit from that rally.  A few of the largest altcoins remain popular but the rest of the market continues to lag behind.  In 2018, there was a lot of talk regarding a possible altcoin apocalypse where only the strong would survive.  That prediction appears to be playing out as expected.  Going forward, only the best projects that have a real world need will survive.  Crypto traders will have to spend a lot of their time doing proper research in order to find the best opportunities, just like in all financial markets.  One promising project that appears to have the makings of a future winner is KaratGold Coin.

KaratGold Background

KaratGold Coin is a cryptocurrency developed by the reputable German company Karatbars International, which maintains a leading position in the market of small gold items and investments. The project is part of a larger ecosystem, which involves several blockchain solutions that can be used for transactions, communication, investing and other tasks. During the past few weeks, however, the KaratGold ecosystem has been a target of unsavory scam allegations.  

Karatbars International and GSB Gold Standard Banking Corporation…

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ICTE May Bring About Sweeping Changes for Cryptocurrency Exchanges

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Cryptocurrency has taken the world by storm during the last few years. An entirely new financial market was created almost overnight which has captured the imagination of all its participants. Cryptocurrency is even starting to attract institutional money from investment banks, hedge funds, and other proprietary trading firms. Despite the rapid growth, traders remain extremely frustrated by having to deal with the fragmented nature of centralized crypto exchanges.

A Change is Needed

When cryptocurrency first began, there weren’t many participants and the trading volume was relatively insignificant. But, over time, that has radically changed. Some tokens now have a capitalization in the billions and are being traded 24-7 by institutions all over the world. Despite the volume, significant problems exist with the current way that exchanges work. Some of those problems include the following:

  • Constant fear of hackers
  • Exchange manipulation
  • Fragmented liquidity
  • Risk of identity theft

One of the biggest issues regarding centralized exchanges is the risk of being hacked. These hack stories seem to always be circulating around the internet. While experienced traders may have the tools to avoid becoming a victim, potential new traders have zero interest in dealing with this. And it’s not just the small exchanges that are at risk. Even large exchanges, such as Mt. Gox and Binance, are subject to being hacked.

Another huge risk is having to deal with…

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Altcoins

SonicX and Dash Could Challenge Facebook’s Libra for Global Payments Market Share

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SonicX
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When Satoshi Nakamoto unveiled Bitcoin to the world, the dream was always for Bitcoin to serve as a new universal currency.  It would be free from the bureaucracy of governments.  And free from the tyranny of the old-world financial cartels.  Although the dream hasn’t yet materialized, it comes closer and closer with each passing day.

One of the biggest roadblocks for Bitcoin has been scalability.  At a speed of approximately 7 transactions per second, Bitcoin lags behind other cryptocurrencies like Ripple and global payment processors like Visa.  Many expect the lightning network to have a positive impact on Bitcoin’s TPS but until that comes to fruition, mass adoption will likely need another significant development.

Libra Currency Announcement

One development that could help pave the way toward mass adoption is the launch of the Libra currency.  Libra is expected to go live during the first half of 2020 according to Facebook’s June announcement.  According to Facebook, Libra will make sending money online cheaper and faster.  It will also have a hand in improving access to financial services, especially for the unbanked.  Given Facebook’s global reach, including many third world countries, providing financial access to the unbanked could provide a huge spark to global economies.  Additionally, it could provide the growth spark that cryptocurrency needs.

Facebook’s most popular messenger, WhatsApp, has approximately 1.5 billion monthly users.  This application is…

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