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Andreessen Horowitz + Union Square Ventures (Major XRP/ Ripple Investors) meet with SEC about exemption from SecReg

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Notably, SEC chairman Jay Clayton raised doubts about the utility token classification earlier this month during a speech at Princeton University, reiterating his previous statement that almost all token sales offer securities.

"If I have a laundry token for washing my clothes, that's not a security," he said at the time. "But if I have a set of 10 laundry tokens and the laundromats are to be developed and those are offered to me as something I can use for the future and I'm buying them because I can sell them to next year's incoming class, that's a security."

This is why I always went with the Stamp analogy for XRP.

RippleNet is the postal system, it costs an XRP stamp to move a package transaction through the network.

I dont know how the post office is taxed on Stamp Revenue?

I think the SEC chairman is wrong by the way. Few of these tokens actually have utility value in the first place, which makes looking at XRP in light of opinions rendered on other blockchains a pretty useless exercise  at benchmarking apples to oranges.

Edited by KarmaCoverage

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7 minutes ago, KarmaCoverage said:

This is why I always went with the Stamp analogy for XRP.

RippleNet is the postal system, it costs an XRP stamp to move a package transaction through the network.

I dont know how the post office is taxed on Stamp Revenue?

I think the SEC chairman is wrong by the way. Few of these tokens actually have utility value in the first place, which makes looking at XRP in light of opinions rendered on other blockchains a pretty useless attempt at benchmarking apples to oranges.

ahh these people knwo exactly whats going on - doom crypto assets in public, buy them privately and legalize them with a lot of media attention to make profits out of them after they moon tzz tzzz.

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My (simplistic) view:

The SEC may be an organization with power an influence, but do you know who has even more power and influence over the SEC? The big financial institutions that basically write the book the SEC has to follow.

So I ask, who is governing who? And would Ripple not be in a position of influence with regulators (SEC), as already discussed at length on these forums?

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if xRapid goes live with WU, MoneyGram, and other Payment Service Provider's prior to Clayton's SEC issuing their determination, then I find it hard for them to argue that XRP is akin to one of those laundry tokens where "laundromats are to be developed and those are offered to me as something I can use for the future and I'm buying them because I can sell them to next year's incoming class, that's a security."

 

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The same old story; security vs commodity. If I buy a barrel oil today with the intention to sell the barrel to next year's incoming class, does this make my barrel a security?

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1 hour ago, KarmaCoverage said:

This is why I always went with the Stamp analogy for XRP.

RippleNet is the postal system, it costs an XRP stamp to move a package transaction through the network.

I dont know how the post office is taxed on Stamp Revenue?

I think the SEC chairman is wrong by the way. Few of these tokens actually have utility value in the first place, which makes looking at XRP in light of opinions rendered on other blockchains a pretty useless exercise  at benchmarking apples to oranges.

Ironically, in your analogy,  XRP is the laundry token, not a stamp. The entire point is that it’s worth the whole amount in fiat.

A stamp analogy doesn’t work because a stamp isn’t worth the amount of the package. It’s a fee to transport the package.

XRP is necessarily the value of the whole transfer. It’s changing forms in entirety. Just like the laundry token, it must equal the value being put into it. 

 

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2 hours ago, Hodlezerper said:

Ironically, in your analogy,  XRP is the laundry token, not a stamp. The entire point is that it’s worth the whole amount in fiat.

A stamp analogy doesn’t work because a stamp isn’t worth the amount of the package. It’s a fee to transport the package.

XRP is necessarily the value of the whole transfer. It’s changing forms in entirety. Just like the laundry token, it must equal the value being put into it. 

 

Good point. I guess if you wanted the stamp analogy to work, you would be putting a stamp (TX fee) on and mailing a box of stamps (value to be settled).

2 hours ago, cmbartley said:

Broken here first: https://www.pehub.com/vc-journal/andreessen-horowitz-union-square-ventures-reportedly-proposed-token-sale-safe-harbor-to-sec/

With links to the PDFs of the memos submitted to the SEC if you have a subscription.

Can you post links to the PDF? It looks like you have to subscribe to see the full article, unless I did something wrong (I got an old adobe error on the page)

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Quoted from the SEC:

Quote

Definition of Security

Under Section 2(a)(1) of the Securities Act, the term “security” is defined as

any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

That definition is not meant to encompass everything that may be a “security” though, as the U.S. Supreme Court has made clear that the definition of “security” is “quite broad” (Marine Bank v.Weaver, 455 U.S. 551, 555-556 (1982)) and meant to include “the many types of instruments that, in our commercial world, fall within the ordinary concept of a security” (H.R.Rep. No. 85, 73d Cong., 1st Sess., 11 (1933)).

Clearly though the offer and sale of stock, bonds, debentures, ownership interests in limited liability companies and most notes with a maturity date over nine months are considered “securities” (Section 3(a)(3) of the Securities Act).

I am not a securities lawyer but believe that most tokens do not fit the 'security' definition under s2(a)(1).  Should XRP tokens be deemed a security, they will need to comply with the regulations and/or seek exemption.  If deemed as a security with no exemption, the 60b tokens held in escrow will never be allowed to be sold.  While accredited and sophisticated investors may only be allowed to acquire these in the primary market if permissible (otherwise, only 40b XRP in circulation with about 30-35b in private/Ripple hands), it is uncertain and unclear whether trading of XRP tokens would be permissible thru an alternate exchange for secondary market trading subject to the risks and disclaimers that are warranted.

 In layman terms to me, a security would be a share of something of value that is owed/granted (eg., interest, dividends, ownership, voting) as XRP token doesn't guarantee anything of value attached to its token except for speculative value that exists for almost all asset classes (eg., painting, Babe Ruth autograph, limited edition coins, collector/limited edition stamps, numbered 888 dollar bills, right to purchase new condo not yet built, tulip mania, computer chips, oil, fx) ...

If would be great for some securities professional or lawyer to reconfirm the pros/cons or pitfalls if XRP is deemed as a security or not.  And to reconfirm my understanding ...

Edited by bookworm

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2 hours ago, CrypToe said:

https://cointelegraph.com/news/former-us-govt-regulator-considers-eth-xrp-likely-noncompliant-securities

 

What would be the implications if the SEC deems ripple a non-compliant security?

Don’t worry about it ‘coz it ain’t gonna happen!

Edited by WhentheBoat_ComesIn

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