FinCEN Declared Ripple's XRP Coin As Currency, Not A Security, SEC Decision Pending

Ripple, the third largest cryptocurrency by market capitalization has been the center of debates, especially after the US SEC decided that Bitcoin and Ethereum will not be regulated as securities. Many say that US FinCen has already set a pattern for Ripple’s definition, which will mean the SEC must eventually follow a similar trajectory.

Ripple is facing two class action lawsuits that allege XRP is a security controlled by Ripple. The company is pushing back against the claims and has hired two former SEC officials to represent it in court.

Ripple signed a settlement agreement with the Treasury’s Financial Crimes Enforcement Network (FinCEN) in 2015, paying a $700,000 fine for

“selling its virtual currency, known as XRP, without registering with FinCEN, and by failing to implement and maintain an adequate anti-money laundering (AML) program designed to protect its products from use by money launderers or terrorist financiers.”

A settlement agreement followed by criminal charges were resolved, and Ripple was fined $450,000 USD. Critically to the debate, the trading of XRP was permitted:

“Through a registered MSB: to implement and maintain an effective AML program: to comply with the Funds Transfer and Funds Travel Rules: to conduct a three-year “look-back” to require suspicious activity reporting for prior suspicious transactions and a requirement for the companies to retain external independent auditors to review their compliance with the BSA every two years up to and including 2020.”

The crux of this point of view is that FinCEN has already signed an agreement with Ripple Inc, allowing them to continue their XRP sales. If XRP is an unlicensed security then FinCEN now has to explain why they signed an agreement allowing the sale of said unlicensed securities.

Ripple has already bound the US Fed Government into a position where $XRP the US Fed Government into a position where $XRP is a currency according to the agreed facts of the settlement. There is no way an entity can be both Security and Currency.

Notably, Ripple has worked hard to portray XRP as a digital currency instead of security.

Brad Garlinghouse, the CEO of Ripple said:

“Whether or not XRP is a security shall not be dictated by one lawsuit. The SEC is the governor of that. I think it is very clear that XRP is not a security. It exists independently of Ripple the company. If Ripple, the company shut down tomorrow, XRP will continue to exist.”

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