Ripple’s Deal With US Treasury Defines XRP as a Currency, Not a Security

[Nazerad17]

https://dailyhodl.com/2018/06/17/ripples-deal-with-us-treasury-defines-xrp-as-a-currency-not-a-security/

[RippleBot]

Quoting the article:

Quote

Ripple signed a settlement agreement with the Treasury’s Financial Crimes Enforcement Network (FinCEN) in 2015, paying a $700,000 fine for “selling its virtual currency, known as XRP, without registering with FinCEN, and by failing to implement and maintain an adequate anti-money laundering (AML) program designed to protect its products from use by money launderers or terrorist financiers.”

The most interesting point highlighted in the the facts and violations section:

Quote

The currency of the Ripple network, known as “XRP,” was pre-mined. In other words, unlike some other virtual currencies, XRP was fully generated prior to its distribution. As of 2015, XRP is the second-largest cryptocurrency by market capitalisation, after Bitcoin.

It raises an interesting point though... Who has more weight in law? the SEC or the US treasury? 

 

[Palerider]

It creates interesting legal president in Ripples/XRPs favor. 

[enrique11]

Yes... That was exactly my argument before in previous posts... And I still hold that opinion. "Pre-mining" involves no work like a real miner... So why should people pay for something (invest in) that was produced out of thin air without it being deemed a security? This "pre-mining" or put other terms, "creation out of thin air" is a contributing factor as to why stocks qualify as securities.

[jcdenton]

12 minutes ago, enrique11 said:

Yes... That was exactly my argument before in previous posts... And I still hold that opinion. "Pre-mining" involves no work like a real miner... So why should people pay for something (invest in) that was produced out of thin air without it being deemed a security? This "pre-mining" or put other terms, "creation out of thin air" is a contributing factor as to why stocks qualify as securities.

In Bitcoin, mining work is valued because of its function (it secures the network), not because it takes effort to do it. Consensus works in an entirely different way. 

[enrique11]

18 minutes ago, jcdenton said:

In Bitcoin, mining work is valued because of its function (it secures the network), not because it takes effort to do it. Consensus works in an entirely different way. 

That's the point I was getting at - mining serves a purpose, regardless if it's POW or much more efficient POS.   Creating it out of this air (done with an intent to be used to raise funds even if the underlying coin has other primary purposes) and selling it is how stocks are created and mostly distributed to others (through selling) outside the company - that's what they have in common.

Edited June 17, 2018 by enrique11

[jcdenton]

4 minutes ago, enrique11 said:

That's the point I was getting at - mining serves a purpose, regardless if it's POW or much more efficient POS.   Creating it out of this air (done with an intent to be used to raise funds even if the underlying coin has other primary purposes) and selling it is how stocks are created and mostly distributed to others outside the company - that's what they have in common.

No. Stocks carry voting rights, rights to receive dividends and secondary rights to a company's assets in case of bankruptcy after bond holders are paid. 

[enrique11]

1 minute ago, jcdenton said:

No. Stocks carry voting rights, rights to receive dividends and secondary rights to a company's assets in case of bankruptcy after bond holders are paid. 

Cryptos are a new asset class that have various features of other asset classes, so I would not expect them to behave exactly like other asset classes, and in that context and to that extent and in my eyes, cryptos created out of this air and sold and stocks have this aspect in common.

[Guest]

2 minutes ago, enrique11 said:

That's the point I was getting at - mining serves a purpose, regardless if it's POW or much more efficient POS.   Creating it out of this air and selling it is how stocks are created and mostly distributed to others outside the company - that's what they have in common.

That's not how stocks are created. Plus the point is not about mining, in a certain sense BTC and ETH are 'pre-mined' as well. How many people knew about it in the beginning when it was only a few individuals mining these? The decision is now about decentralization, that's where it is at. 

[Guest]

I'm amazed to continue seeing these totally pointless discussions....  The fact is the SEC can jump in any direction it wants.

But more importantly...   None of anything we say or do or believe matters.

Why bother trying to convince anyone on either side of this when it's all totally beyond our control?  Furthermore even coming to a consensus on how it should go will not in any way be a useful predictor since the matter is essentially arbitrary.  How many angels can fit on the head of a pin?

[jcdenton]

7 minutes ago, Tinyaccount said:

I'm amazed to continue seeing these totally pointless discussions....  The fact is the SEC can jump in any direction it wants.

But more importantly...   None of anything we say or do or believe matters.

Why bother trying to convince anyone on either side of this when it's all totally beyond our control?  Furthermore even coming to a consensus on how it should go will not in any way be a useful predictor since the matter is essentially arbitrary.  How many angels can fit on the head of a pin?

Sure, but then there would be no point to engaging in a forum at all. I like to speculate occasionally and learned a lot from reading @eromyr's posts who is a US attorney engaged in similar fields and wouldn't at all agree that the matter is arbitrary. Why am I reading a book about Karl von Bülow? The guy is dead. 

17 minutes ago, Tinyaccount said:

How many angels can fit on the head of a pin?

TWENTY-THREE, prove me wrong ?

[Amigo]

1 hour ago, ed1 said:

That's not how stocks are created. Plus the point is not about mining, in a certain sense BTC and ETH are 'pre-mined' as well. How many people knew about it in the beginning when it was only a few individuals mining these? The decision is now about decentralization, that's where it is at. 

That, and not to mention that mining Bitcoin is creation out of thin air as well, even today. All actually stays less than thin air as one cannot hold it. Just like Google creates search hits out of thin air. Yet all will be worth something, related to its functionality. The one who dares to waste the most elektricity is not by which it is measured (that should actually receive an environmental tax if you ask me). XRPs value was near zero at the start, but gained value once people adopted its functionalities, and as it got used during the years. ICOs turn that around  (first money and then try to make it work). That is why many ICOs are forced to refund by the SEC (as that functions as a security). Ripple cannot be forced to refund you because you did not buy it from them. And XRP cannot be forbidden to be traded amongst each other on a regular exchanges as well, as should it have been a security a long time ago, it is not anymore, and prohibit its trade would only hurt the general hodlers (by a price crash) which is precisely not what the SEC is after. The worst thing that could happen is that Ripple gets another fine or has to sell the rest of their XRP stash through Security channels. Which would not be bad for XRP Hodlers as that means there might no extra supply comming onto the market for a while which will make XRP's price rise (if the demand is there). But as Ripple has been in contact with the SEC and FINCEN for a loooong time, even that will not happen.

Edited June 17, 2018 by Amigo

[Guest]

8 minutes ago, jcdenton said:

Sure, but then there would be no point to engaging in a forum at all. 

Oh there is a big difference between this discussion and many others....  In most there is a personal action that we can take, or more info that we can learn that can advise our decisions...  In this matter there is only opinion, and only one units opinion matters,.. the SEC.

I don't mean to say don't discuss...  And who on earth would care what I say anyway...  I just mean to point out that it's a fruitless discussion since irrespective of reality or consensus the SEC can land on either side and no doubt will make clear their intent in time.

But of course...  I love discussion and often indulge in fruitless ones.    

[Guest]

15 minutes ago, jcdenton said:

TWENTY-THREE, prove me wrong ?

There is a school of thought (that I just created ) that says that those who can only see 23 are doomed to eternally discuss the unknowable.    

[jcdenton]

4 minutes ago, Tinyaccount said:

Oh there is a big difference between this discussion and many others....  In most there is a personal action that we can take, or more info that we can learn that can advise our decisions...  In this matter there is only opinion, and only one units opinion matters,.. the SEC.

I don't mean to say don't discuss...  And who on earth would care what I say anyway...  I just mean to point out that it's a fruitless discussion since irrespective of reality or consensus the SEC can land on either side and no doubt will make clear their intent in time.

But of course...  I love discussion and often indulge in fruitless ones.    

Get your point. I'm still amazed however at how many unlikely topics I got into thanks to engaging with Bitcoin (originally). Money itself, the idea of protocols, then geopolitics, market manipulation, game theory... Why not regulatory bodies like the SEC. Of course there's always the danger of getting into a shouting match about amateurish half-truths on the internet -- got to know when to let it be. 

8 minutes ago, Tinyaccount said:

There is a school of thought (that I just created ) that says that those who can only see 23 are doomed to eternally discuss the unknowable.    

We call it heaven ?