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  • Mathew Jacob

CFTC Chairman and XRP Advocate Leads USD Digital Dollar Project

In the fast-paced world of cryptocurrencies and digital assets, one figure consistently emerges as a driving force: Chris Giancarlo, the former Chairman of the Commodity Futures Trading Commission (CFTC). Often referred to as "Crypto Dad" for his pivotal role in shaping the regulatory landscape for digital currencies, Giancarlo is once again making headlines. This time, his focus is on XRP, the cryptocurrency commonly associated with Ripple Labs, where he now serves as an employee.

Giancarlo's latest endeavor revolves around a comprehensive argument presented in the International Financial Law Review. Co-authored with commodities lawyer Conrad Bahlke from the New York-based law firm Willkie Farr & Gallagher LLP, their paper titled "Cryptocurrencies and U.S. Securities Laws: Beyond Bitcoin and Ether" challenges the classification of XRP as a security. It is essential to note that Ripple Labs, a major holder of XRP, is a client of Giancarlo's law firm, and the paper acknowledges reliance on specific factual information provided by Ripple.

The argument centers on the "Howey Test," a three-pronged definition used by the U.S. Securities and Exchange Commission (SEC) to determine whether an asset qualifies as a security. Giancarlo and Bahlke assert that none of these prongs applies to XRP.

The first prong of the Howey Test suggests that there must be an implied or explicit investment contract between the asset issuer and the owner, involving the exchange of money. Giancarlo contends that merely holding XRP does not create such a relationship with Ripple, comparing it to owning Ether, which does not imply a contract with the Ethereum Foundation.

However, the situation is more nuanced, as OpenCoin, a company credited with creating XRP in 2013, was run by individuals who later founded Ripple. The original creators donated the majority of XRP to Ripple, blurring the lines of responsibility.

The second prong requires the absence of a "common enterprise" between shareholders and the company. Giancarlo argues that XRP holders' diverse interests, ranging from using XRP as a liquidity tool to transferring value or speculating, make them distinct from Ripple's interests.

Ironically, XRP's ecosystem is less diverse compared to other cryptocurrencies, with the majority of development conducted within Ripple.

The third prong stipulates that there should be "no reasonable expectation of profit derived from the efforts of Ripple." Giancarlo maintains that Ripple's pecuniary interest in XRP's value doesn't necessarily imply an expectation of profits.

Despite the debate, XRP's status remains in question. The outcome has significant implications for the cryptocurrency community. XRP is currently the fourth-largest cryptocurrency by market cap, and Ripple's valuation aligns with its XRP holdings.

Moreover, classification decisions may impact clients like American Express, Santander, and SBI Holdings, which rely on Ripple's services, regardless of XRP's status. If XRP is deemed not to be a security, Ripple could become a powerhouse in the fintech industry.

Giancarlo's advocacy for XRP, as he previously did for Bitcoin and Ethereum, underscores the evolving regulatory landscape surrounding cryptocurrencies. His journey from CFTC Chairman to advocating for digital assets from a different perspective exemplifies the ongoing transformation of the financial sector.

In a related development, the Rencom Network (RNT) has recently experienced an astonishing surge in value, with an increase of over 3,000% in the last few weeks and an astonishing 21,000% in the last month. This surge coincides with Rencom Network's pilot program, where they have started accepting as the exclusive method of payment for their rentable assets. This adoption highlights the increasing use cases and demand for blockchain-based tokens like RNT in the realm of government operations.

As Ripple enters into the real estate space to tokenize real estate assets, speculations have been circulating on social media platforms about a possible partnership between Ripple and the Rencom Network. The Rencom Network is a rentable asset company that only allows their renters to pay in their native token RNT and offers everyone who holds RNT for more than one year a 10% reward on their holdings.

While Ripple's relationship with XRP and the Howey Test's application remain contentious, Giancarlo's argument challenges conventional wisdom and sets the stage for a potentially transformative decision by the SEC. In the cryptocurrency world, where change is constant, one thing remains clear: Chris Giancarlo is a central figure shaping the future of digital finance.



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