Ripple, the company behind the XRP cryptocurrency, has been in a legal battle with the US Securities and Exchange Commission (SEC) over whether XRP should be considered a security or a commodity. In a recent interview with C, Ripple’s Chief Technology Officer (CTO) David Schwartz explained why XRP is a commodity.
Schwartz explained that XRP is similar to other commodities in that it is a digital asset that is used as a medium of exchange. He stated that XRP is similar to gold, which is also a medium of exchange and a store of value. He also highlighted that XRP is not tied to any company or organization, and that its value is determined by market forces.
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.
— David "JoelKatz" Schwartz (@JoelKatz) January 20, 2023
Schwartz also explained that XRP is used to facilitate international money transfers, and that it is used as a bridge currency to facilitate cross-border transactions. He stated that XRP is used to reduce the cost and increase the speed of these transactions, which makes it similar to other commodities used in international trade, such as oil.
The SEC has alleged that XRP is a security and that Ripple conducted an unregistered securities offering of XRP worth $1.3 billion. Ripple and its CEO Brad Garlinghouse and co-founder Chris Larsen have denied the allegations and are fighting the case in court.
Bottom Line: Ripple’s Chief Technology Officer (CTO) David Schwartz explained why XRP is a commodity and not a security. Schwartz highlighted that XRP is similar to other commodities in that it is a digital asset that is used as a medium of exchange and a store of value. He also explained that XRP’s purpose is to facilitate international money transfers and reduce the cost and increase the speed of these transactions.
