The European Corporate Governance Institute (ECGI) has published a fresh research paper acknowledging the non-security status of XRP as ruled by a U.S. federal court last year.
This recognition came in a study titled “Corporate Governance Meets Data and Technology,” authored by two university scholars: Wei Jiang of Emory University and Tao Li of the University of Florida.
Notably, these scholars cited Ripple and XRP in the context of regulatory concerns surrounding token offerings, particularly regarding securities regulations and token classification.
A prominent XRP community figure using the pseudonym “WrathofKahneman” spotlighted the research in an update.
The European Corporate Governance Institute notes #XRP was not found a security by the court in this recent paper, “Corporate Governance Meets Data and Technology.”https://t.co/o1iKC6jqRS pic.twitter.com/uJ0bDpKfJE
— WrathofKahneman (@WKahneman) March 14, 2024
ECGI Affirming XRP Non-Security Status
First, the report discussed how the fundraising landscape in blockchain-based startups has evolved with token offerings. It includes fundraising moves via initial coin offerings (ICOs), initial exchange offerings (IEOs), and security token offerings (STOs).
In parallel, the report highlighted the regulatory scrutiny these fundraising methods face, particularly concerning the classification of issued tokens.
The concern stems from the regulatory arguments that certain issued tokens might be categorized as securities. Proponents believe such categorization requires the issued tokens to adhere to securities issuance laws and regulations.
The university scholars called attention to the U.S. SEC’s lawsuit against Ripple Labs as a case study. In particular, the SEC contested that XRP is a security, alleging that Ripple’s XRP sales violated U.S. securities laws.
Meanwhile, the researchers pointed out that XRP was vindicated by the U.S. court on July 13, 2023. Specifically, XRP was not considered a security when sold to the public on an exchange. However, it was classified as a security when sold directly to institutional investors.
Notably, this recognition is significant within the broader discussion of token offerings and regulatory compliance, as it provides a specific example of how regulatory authorities approach the classification of cryptocurrencies like XRP.
Meanwhile, in response to the research, legal expert Bill Morgan provided more context to clarify XRP’s position. Morgan stated that XRP itself “is never a security.” However, he noted that XRP may be involved in transactions or schemes that are considered securities.
