Former Commodity Futures Trading Commission (CFTC) Chairman Chris Giancarlo issued an opinion on June 17 arguing that XRP does not meet the criteria to be considered a security under the Howey Test.
Giancarlo left the CFTC in April 2019, and is no longer in charge of making such decisions. Perhaps even more questionable, he is now financially linked to Ripple, the largest XRP token holder.
„XRP is not a security.“
So says Giancarlo, who is also known as „Crypto Dad“. He’s the one who got Bitcoin (BTC) and Ether (ETH) declared commodities in the first place, so he must know what he’s talking about, right?
Ripple confirms the implementation of his ODL system in Brazil very soon
Giancarlo’s report applies the three-pronged approach of the Howey test to XRP to evaluate it. To qualify as a value, a token must represent an investment „in (1) a joint venture, with (2) an expectation of profit, (3) solely from the efforts of the developer or a third party“.
It concludes that XRP does not meet any of the three criteria, before refuting longstanding concerns about Ripple’s large XRP reserves and the level of decentralisation of the network.
But, wait a second…
Ripple’s success in the Mexico-US remittance corridor makes it necessary to consider expansion to other geographic areas
However, we may not be getting the most objective opinion on the matter.
Right at the end of the report, a footnote indicates that Willkie Farr & Gallagher, for whom Giancarlo works as lead counsel, also provides advice to Ripple on certain matters. Ripple also provided „factual information“ in the preparation of the report.
This is not to say that Giancarlo’s arguments are not valid, although this Forbes article selects some of them as questionable. It is simply that it is difficult to accept that the report is totally impartial.
Ripple and the Central Bank of Brazil hold a closed meeting to discuss
And if we can’t trust it to be that way, then it really doesn’t matter who wrote it.
Ripple shoots himself in the foot?
The final decision on whether or not Corona Millionaire is a value is likely to have serious positive or negative consequences for a large number of parties interested in Ripple, XRP or any associated technology.
One can only imagine that this report was supposed to carry some weight with potential decision-makers at the Securities and Exchange Commission. The links with Ripple, however, make this questionable.
Ripple recently announced plans to extend its liquidity on demand (ODL) to Brazil in the near future.