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Not long ago, it was announced that the Commodity Futures Trading Commission (CFTC) had filed a lawsuit against Binance, the biggest and most popular digital currency trading platform in the world. There are many Ripple fans out there who are concerned that the suit could have drastic effects on XRP, the platform’s native token, and that the asset could experience volatility like never before.
How Will Ripple Be Classified?
Ripple has added about 40 percent to its price since the beginning of the year, suggesting that while it has certainly enjoyed the effects of the bull run, it hasn’t witnessed its price or value expand as much as bitcoin or Ethereum have. However, there are many analysts out there that are continuing to argue in favor of it, and they believe the currency has what it takes to completely revamp the digital currency arena in ways nobody thought possible.
Genevieve Roch-Decter, the chief executive of capital market advisory company Grit Capital, explained in a recently emailed statement:
Despite new fears arising from the CFTC filing against Binance that XRP tokens could be considered commodities, XRP has surged over the last 24 hours in stark contrast to broader crypto markets.
One of the reasons the present CFTC lawsuit against Binance is bringing so much attention to Ripple has to do with the latter’s present case with the Securities and Exchange Commission (SEC). Not long ago, the SEC filed a lawsuit against Ripple, claiming it violated numerous securities laws. Ripple has vowed to fight the lawsuit and at the time of writing, appears to be on the verge of winning its case after gaining steam in a U.S. courtroom.
Many executives of Ripple – including chief technology officer David Schwartz – believe Ripple is more of a commodity, and thus shouldn’t fall under the jurisdiction of the SEC. This is why he and his team have agreed to fight the suit with all their might. On Twitter, Schwartz stated:
XRP is a raw good that trades in commerce, and one XRP is treated as equivalent to every other XRP. That’s pretty much the definition of a commodity. No part of XRP’s value comes from anyone else’s legal obligations to XRP holders.
So Many Poorly Classified Tokens Out There
The lawsuit between both the CFTC and Binance alleges that several digital assets in circulation right now – including bitcoin, Ethereum, Litecoin, and Binance’s USD token – are all commodities, and thus should be regulated by the agency. Schwartz is clearly of the opinion that Ripple also falls into this category, and thus the SEC needs to butt out and mind its own business.
The SEC has been in the process of bullying several digital currency companies as of late including Coinbase, which recently received a Wells notice from the agency.