Crypto: Security or Commodity? Judge’s Decision Could Change Everything17. March 2023
• The SEC is currently in a lawsuit against Ripple Corporation, the company that owns XRP, for allegedly raising funds without registering it as a security.
• This case has implications for other crypto tokens, and many would prefer to be regulated by the Commodity Futures Trading Commission (CFTC).
• Factors such as news and inflation can influence the price of crypto.
SEC Lawsuit Against Ripple
The Securities and Exchange Commission (SEC) has charged Ripple Corporation with selling its digital asset known as XRP without registering it as a security. It alleges that Christian Larsen and Bradley Garlinghouse made personal unregistered sales of XRP totaling approximately $600 million. If found guilty, this could lay the predicate for similar charges against other cryptos.
Many members of the crypto industry would prefer to be regulated by the Commodity Futures Trading Commission (CFTC), which governs commodities such as sugar, wheat, oil, and gold. Factors influencing the price of crypto include both individual token news as well as macroeconomic factors like inflation and employment that also affect other commodities.
Excess liquidity, quantitative easing, money overprinting, high M2 supply and low-interest rates tend to drive up the prices of crypto tokens. On the contrary, when central banks apply quantitative tightening measures or raise interest rates to reduce inflation, this can lead to decreased prices in cryptocurrencies.
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The outcome of this case between Ripple Corporation and SEC could have major implications on how crypto tokens are classified in terms of their legal status going forward. As such it will be interesting to see how Judge Analisa Torres rules on this matter in due time!