XRP Can Benefit Greatly With New Token Taxonomy Act, Amending Prior Securities Exchange Act
XRP Could Be Benefited By The Amends Proposed By Congressmen To The Old Securities Definition
Ripple could potentially be benefited if the proposal to change the 72-year-old securities definition is approved. There are two congressmen presented a bill called Token Taxonomy Act that defined ‘digital token’ and allows assets to be clearly defined. Furthermore, it will provide clarity about securities laws that are currently being applied to some tokens in the market.
This is a result of the combined effort of both Warren Davidson and Darren Soto. According to CNBC, Davidson explained that the intention is to achieve a win for America.
On the matter, Davidson commented:
“In the early days of the internet, Congress passed legislation that provided certainty and resisted the temptation to over-regulate the market. Our intent is to achieve a similar win for America’s economy and for American leadership in this innovative space.”
At the moment, the U.S. Securities and Exchange Commission (SEC) uses the Howey Test to determine whether an asset is a security or not. However, the Howey Test is not clear and there are vague rules that are harming the crypto space.
XRP would be benefited by this amend. Regulatory agencies and some analysts suggested that XRP is a security, but Ripple and XRP supporters provided a clear explanation about why XRP cannot be considered a security. One of the main issues is related to centralization. However, Brad Garlinghouse explained that Bitcoin (BTC) is more centralized than XRP. Most of the Bitcoin miners are located in China and a lot of the hash rate of the Bitcoin network is controlled by just a few companies.
Furthermore, XRP supporters explain that if Ripple shuts down and it does not operate anymore, XRP would keep being traded in many different exchanges around the world. This would prove that the asset is decentralized and it does not depend on just one institution.
Due to this uncertainty in the market, crypto platforms and exchanges such as Gemini, Kraken or Coinbase did not offer support for XRP. However, if regulations change and become clearer, XRP could be listed in these exchanges in the future. Coinbase has already informed that they are analyzing the possibility to add XRP.
At the time of writing, XRP is the second largest virtual currency in the market after Bitcoin (BTC) according to CoinMarketCap. It has a market capitalization of $14.56 billion and each XRP coin can be purchased for $0.357.