Following the recent announcement by the Securities and Exchange Commission (SEC) that Bitcoin (BTC) and Ethereum (ETH) are not securities, there has been much speculation regarding the status of Ripple (XRP).
Now the argument has highlighted upon a 2015 ruling by the US Financial Crimes Enforcement Network (FinCEN) that appears to define Ripple as a currency and not a security. Yesterday, entrepreneur and Ripple wallet creator Richard Holland (@codetsunami) pointed out on Twitter that FinCen has already signed an agreement that allows Ripple to continue sales.
The agreement was part of a criminal case back in 2015 involving a violation by Ripple of the Bank Secrecy Act (BSA). Ripple received a civil enforcement charge for acting as a money services business without first registering with FinCEN and failing to implement secure Anti-money Laundering (AML) practices.
In the end, Ripple was fined $450,000 but was allowed to continue trading provided they monitor future transactions and allow external independent auditors to review their compliance.
Citing a statement of facts and violations from the case, Holland highlights a section that defines Ripple as a currency and goes on to detail that ‘unlike some other virtual currencies, Ripple was fully generated prior to its distribution.’
Supporters of Ripple support the notion and often quote Section 2(a)(1) of the Securities Act to highlight how Ripple does not fit in with the U.S authorities definition of a security. The new revelations could make the debate moot – if the FinCEN ruling is irreversible then Ripple is already defined as a currency.
In a recent interview with CNBC, Ripple CEO Brad Garlinghouse made his opinion on the matter clear. He believes it is very clear that Ripple is not a security and goes on to state that should Ripple the company cease to exist, XRP the currency would continue as a separate entity.