Cryptocurrencies Amid Ripple LawsuitAside from the cryptocurrency XRP, Ripple is known for its payment settlement, asset exchange, and remittance system that works more like SWIFT, a service for international money and security transfers that is used by banks and financial intermediaries.
However, the SEC filed a lawsuit late last year against Ripple for allegedly selling XRP as an unregistered security token. In its action against Ripple and two of its executives, the SEC alleged that they “raised over $1.3 billion through an unregistered, ongoing digital asset securities offering”. In Ripple’s formal response, they contend that XRP is just another cryptocurrency like Bitcoin (BTC) and Dogecoin (DOGE). Therefore, it is outside the SEC’s jurisdiction.
The big question now is “has this incident affected people’s preference on their choice of cryptocurrency?” This Real Research insight will lay out the details.
Highlights
- The majority agrees that the Ripple lawsuit can affect other cryptocurrencies.
- 87% of the respondents say that XRP is a security token.
- Almost 40% believe that XRP is a security token because it is created and distributed by the founders of Ripple.
- 85% believe that XRP is a type of utility token as its purpose is to transfer funds globally.
Ripple Lawsuit Can Affect Other Cryptocurrencies
From a total of 500,000 respondents, 40.93% said that this lawsuit against Ripple can affect other cryptocurrencies. On the other hand, 26.25% do not think it will affect at all, while 32.82% are not sure about its effect on other cryptocurrencies. The respondents consist of 64.85% cryptocurrency traders while 35.15% consists of those who are not cryptocurrency traders.
Ripple said in a statement that the SEC’s lawsuit has already harmed “countless innocent XRP retail holders with no connection to Ripple”.
At its core, Ripple is a remittance network. This issue because it facilitates international payments and currency trades. Their goal is basically to minimize the delays and high transaction costs of international transactions today.
Classification of XRP as a Token
Not a “true” cryptocurrency by the standard definition, Ripple may be creating a line that separates two distinct products to emerge on the cryptocurrency revolution: solutions and assets. While solutions will dispense with the speculation and create platforms that are “technically” cryptocurrency, assets can serve as investments placing faith in a decentralized community.
With that being said, 47.87% of the respondents viewed XRP as a security token while 28.27% consider this as a utility token.
XRP as a Security Token
The legal standard to consider a given asset a security token is the Howey test. For an investment to be considered a security under Howey, the scheme needs to have an investment of money with an expectation of profits in a common enterprise and its profits should be derived from the effort of others.
Given that information, almost 39.42% believe that XRP is a security token. This is because it is created and distributed by the founders of Ripple. Following this, 26.82% consider XRP as a security token. This is because it involves an investment of money in a common enterprise. On the other hand, 10.78% think that XRP is a security token only in the US due to the US ICO regulations. Meanwhile, 6.35% said that it is indeed a security token because XRP purchases result in an expectation of profits.
If XRP is deemed as a security, it could have a range of implications for Ripple. This is because the trade and sale of the XRP can now be subject to SEC regulations, particularly the Securities Act of 1933. If Ripple is deemed as security while Bitcoin and Ethereum have been deemed not, this will have an effect on how future blockchain networks are structured from a technical point of view.
XRP as a Utility Token
In comparison, due to its ability to transfer funds globally, 29.85% believe that XRP is a type of utility token. Additionally, 24.23% think that this is because it powers the XRP Ledger blockchain. Meanwhile, since XRP can be traded for other cryptos, 20.71% say it is a utility token.
On the other hand, some believe that XRP is a utility token as it can be swapped for other cryptocurrencies. It can also be used to buy goods and services that is why they consider it as a utility token. Only 9.71% of the respondents do not believe that XRP is indeed a utility token.
Conclusion
In conclusion, almost 48% of the respondents believed that XRP is classified as a security token. On the other hand, some of the respondents believe it is a utility token. However, if XRP is proven to be a security token, it could have a huge impact on Ripple and the crypto industry.
Methodology | |
| Survey Title | Public Opinion on Cryptocurrencies Amid Ripple Lawsuit |
| Duration | February 9th to 19th, 2021 |
| Number of Participants | 500,000 |
| Demographics | Males and females, aged 19 to 60+ |
| Participating Countries | Afghanistan, Algeria, American Samoa, Andorra, Angola, Argentina, Armenia, Australia, Azerbaijan…Bahrain, Bangladesh, Belarus, Belgium, Benin, Bhutan, Bolivia, Bosnia and Herzegovina, Brazil, Brunei, Bulgaria, Cambodia, Cameroon, Canada, Chile, China, Colombia, Costa Rica, Croatia, Cyprus, Ecuador, Egypt, El Salvador, Estonia, Ethiopia, Finland, France, Georgia, Germany, Ghana, Greece, Guatemala, Haiti, Hong Kong, India, Indonesia, Iraq, Israel, Italy, Ivory Coast, Japan, Jordan, Kenya, Kuwait, Kyrgyzstan, Laos, Latvia, Lebanon, Libya, Luxembourg, Macedonia, Madagascar, Malawi, Malaysia, Maldives, Malta, Mauritania, Mexico, Moldova, Mongolia, Morocco, Mozambique, Myanmar [Burma], Nepal, Netherlands, New Zealand, Nicaragua, Nigeria, North Korea, Oman, Pakistan, Palestine, Panama, Peru, Philippines, Poland, Portugal, Qatar, Romania, Russia, Rwanda, Saudi Arabia, Senegal, Serbia, Seychelles, Singapore, Slovakia, Slovenia, Somalia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Taiwan, Tajikistan, Tanzania, Thailand, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, Vietnam, Yemen, Zambia, Zimbabwe. |
RR Author
Real Research News is the media platform that presents insights and studies of wide-range of topics. It focuses on insights gathered from its survey app.
