XRP is not a security?

There was a court decision in the Ripple/XRP case yesterday, which set the internet on fire.

The proponents of XRP were boasting that XRP was confirmed to not be a security. The detractors of XRP were claiming that XRP sales to institutions were confirmed to be sales of unregistered securities.

So which is true?.

The answer is complex, but both have a strong argument..

First, institutional sales of XRP were deemed to be unregistered security sales.

The argument is that institutions were not buying XRP as a replacement for fiat currency, but rather they were buying XRP for the future potential appreciation in the token price.

Here is the relevant section from the ruling:

The explanation seems crystal clear here, so you may be asking yourself why XRP almost doubled in price yesterday and people seem to be celebrating on the internet. Well, non-institutional sales—including on exchanges and secondary sales—were confirmed to not qualify as sales of a security.

Ripple’s Chief Legal Officer Stuart Alderoty said:

“A huge win today – as a matter of law - XRP is not a security. Also a matter of law - sales on exchanges are not securities. Sales by executives are not securities. Other XRP distributions – to developers, to charities, to employees are not securities.”

This is where you are getting the enthusiasm, and subsequent price appreciation, related to XRP. In the majority of the cases being evaluated by the court, XRP has been found to not be a security.

I won’t bore you with more legal details. You can read those elsewhere. But the ramifications of this legal decision are going to be immense. Here are a few that immediately come to mind:

If XRP is not a security, then the majority of the other cryptocurrencies will probably be classified as not a security. This would create regulatory clarity once confirmed.

Regulatory clarity will lead to more investors allocating capital to the space. They will have less friction in getting approvals from their compliance departments.. .