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MatinMontreal

Are the SEC, the CFTC, and Congress threats to XRP?

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I've been very impressed by Ripple's commitment to working with regulators.  We know for example that they have: 1) recently hosted a central bank forum with over 2 dozen central banks, 2) met directly with the Chinese central bank, 3) participated in the Federal Reserve's Faster Payments Task Force, 4) performed a proof of concept with the Bank of England, and 5) have worked closely with other various Asian regulators.  In addition, Ripple's Ryan Zagone sits on the FInTech Advisory Panel for the US State Banks Supervisors Board.  It's quite the expansive outreach.

In addition, we might assume that in the current regulatory environment in the U.S., there will be a cautious or, at least, light touch to regulating cryptocurrencies.  In particular, the (likely) next Fed Chair, Jerome Powell, was active with the Faster Payments Task Force.  And it's hard to see Jay Clayton at the SEC taking on an aggressive regulatory approach.  But, still, it's important to take nothing for granted in politics.

I am still somewhat worried about both the SEC and the CFTC. While there has been noise from these other regulators about cryptocurrencies, there hasn't been much concrete action...yet.  This could change in 2018 as public attention grows.  Some regulators have argued that, in certain instances, cryptos are securities.  The CFTC has also argued that they can, in certain instances, be considered commodities.  Some have said they can also be considered derivatives contracts.  So what does all this mean for banks when they want to use XRP?  Will they be expected to treat XRP as a security, a commodity, a currency, or some other sort of asset?  What will this mean for their bookkeeping and compliance?  Also, will XRP be treated differently from other cryptos because its use case is different than say Bitcoin or Ethereum?  I fear there is a real chance that this regulatory uncertainty will stall US adoption in the year ahead. 

I don't think Ryan Zagone is on XRPChat, but perhaps @miguel or @JoelKatz can offer some insight here?

I'd also add that I think its important for Ripple to have a strategy to educate federal lawmakers.  In particular, the Republican and Democratic leadership of the House and Senate, the House Financial Services Committee members, the Senate Banking Committee members, and key staff in the White House.  There is such a good story to tell on all sides of the political spectrum - for Republicans, it's the libertarian, anti-regulatory, technological entrepreneurial narrative and for Democrats it's things like cheaper remittances, an environmentally friendly crypto, and the partnership with the Gates Foundation.  Something for everyone.  Maybe Ripple is already doing this and just hasn't shared it with the community.  But, as someone who has worked for a regulatory agency, as a congressional staff, and as a lobbyist, I feel strongly that this conversations are vital to Ripple's success and wanted to put this out into the public debate. 

As the old saying goes, if you're not at the table, then you're on the menu.  Ripple has an awesome story.  And, unlike other cryptos which are not created and distributed by a single entity, Ripple has the benefit of being able to have a unified corporate strategy to impact policy and ensure the success of XRP.

I welcome others' thoughts on the risks around the SEC, the CFTC, and Congress.  And I would especially love to hear from Ripple employees about how they intend to mitigate these potential risks in the months/years ahead. 

Edited by MatinMontreal

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No...

Ripple is now in bed with these organizations. [Ripple has dealt with these regulatory bodies in 2014/15, or rather they have dealt with Ripple]

It is intriguing that Dash, ZCash, Ethereum (the home of ICOs) and others... all have not received the attention of the regulatory bodies you cite. This situation would give pause to an inquiring mind, as to... why.

Edited by Max Entropy

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1 minute ago, Max Entropy said:

No...

Ripple is now in bed with these organizations. 

It is intriguing that Dash, ZCash, Ethereum (the home of ICOs) and others... all have not received the attention of the regulatory bodies you cite. This situation would give pause to an inquiring mind, as to... why.

I think enhanced ICO scrutiny is coming.  There is already plenty of noise in the system about them.

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Well, I expect that Tezos may be a trigger, but I wonder what they can do? Vitalik is not American, the Ethereum foundation is Swiss, and it is the Ethereum global network provides the foundation for the ICOs. Ethereum as a foundation does not operate the network or control the ICOs. Besides, everyone considers Ethereum a research playground.

You are correct, it will be informative to watch.

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I expect that you know there is 'bill' in the US congress that would exempt purchases under 600$ from IRS treatment. 

I think have this right, although others may have a more detailed account. I have not read the article.

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7 minutes ago, Max Entropy said:

I expect that you know there is 'bill' in the US congress that would exempt purchases under 600$ from IRS treatment. 

I think have this right, although others may have a more detailed account. I have not read the article.

Yes, I've seen the bill.  With such a low threshold, it's clearly geared toward retail investors, but won't impact institutional trading.  I expect we will see more and more crypto bills being introduced in the months to come.  There will be lawmakers who will want to be seen as leaders in this space.  I would expect potential hearings in the months to come, too.

 

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41 minutes ago, Max Entropy said:

It is intriguing that Dash, ZCash, Ethereum (the home of ICOs) and others... all have not received the attention of the regulatory bodies you cite. This situation would give pause to an inquiring mind, as to... why.

I think it's both ways definitely, @Max Entropy but you bring up a strong point.  I believe I know the answer: It is convenience.  Ripple is a company based in the United States, (arguably) the headquarters for global financial regulation.  Having your headquarters based in countries notorious for being obstinate with global regulation (Switzerland, e.g. in the case of Ethereum) gives it the advantage of not being the "low-hanging" fruit for enforcement. 

I think it's a matter of time before we see new forms of enforcement; I predict the rise of a new industry - crypto-forensics™   By the way, I get a quarter every time that phrase is used. 

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Ok makes sense, but what jurisdiction?

Zerohedge Commenter recently said, that given the context of USD reset, politicians will not block their own exit paths from USD. I think this is, as one would say, 'right on the money'. So... it may be awhile before cryptos are brought into compliance... with something jurisdictional.

i am not in the globalist camp, as there is less accountability. There is now a swing away from globalism. So this will be interesting.

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