The head of the U.S. Commodity Futures Trading Commission (CFTC) has said it is “unclear” whether XRP is a security or a commodity.
The distinction between commodities and securities is an important one for the crypto sector, with different agencies responsible for regulating each asset type in the United States. But according to an interview with CFTC chairman Heath Tarbert for news outlet Cheddar, Heath believes it remains uncertain how XRP would be classified.
It’s unclear. Stay tuned I’d say. Part of the issue is that our jurisdiction we share with the SEC [Securities and Exchange Commission]. If it’s a security, it falls under their jurisdiction. If it’s a commodity, it falls under ours.
Tarbert said the CFTC had been working in conjunction with the Securities and Exchange Commission (SEC), which regulates securities, in order to determine “which falls in what box.”
— Cheddar News 🧀 (@cheddar) January 13, 2020
At the moment, several types of crypto assets appear to be commodities, according to Tarbert, including ETH and BTC. Last October, Tarbert was unequivocal in classifying both tokens as commodities.
“We’ve been very clear on [BTC]: [BTC] is a commodity. We haven’t said anything about ether – until now. It is my view as chairman of the CFTC that ether is a commodity,” he said.
However, the status of XRP has been less clear, and has been the subject of some debate amongst regulators. While Ripple maintains it is not a security, investors have raised lawsuits against the company over alleged violations of state and federal securities laws.
Many other types of crypto assets have been found to be securities, leading to investigations and prosecutions from the SEC into those firms found to have been offering securities tokens without prior the registration and approval of the regulator.
While Ripple maintains its fundamental characteristics make it “not a security”, the decision will ultimately lie with regulators and the courts, if needs be, to determine how XRP should be regulated.
Should XRP be deemed a security, it may open up Ripple to investigation from the Securities and Exchange Commission. As a commodity, it would fall within the remit of the CFTC.
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