SMQKE, crypto researcher and XRP community figure, shares what he believes is evidence that XRP will come under the purview of the upcoming MiCA regulation.
The pundit first presented his argument last month, citing information from two different research papers. One of the papers was a report from the Banque de France (Bank of France), the French central bank, in April. The report focused on CBDCs and crypto assets, specifically discussing the tokenization of finance and digitization of the economy.
MiCA Covers Utility Tokens
Notably, the research paper spotlighted the Markets in Crypto-Assets (MiCA) regulation as an integral part of the broader European Union’s push toward enacting a robust framework for digital assets. This framework would be beneficial to the French central bank’s ambition to digitize the economy and tokenize finance.
The report called attention to the fact that MiCA would cover stablecoins, utility tokens, and other crypto assets such as Bitcoin. Interestingly, SMQKE further shared a report from Delphi Digital and commentary from Enoch Chng suggesting that XRP is actually a utility token.
His argument was that since the report considered XRP a typical utility token, it fell under the purview of MiCA. However, this deduction was not completely flawless, as the documents declaring XRP a utility token are not in any way related to European financial authorities. As a result, it is impossible to ascertain if EU authorities also see XRP as a utility token.
Does the EU Consider XRP a Utility Token?
Weeks after his initial disclosure, SMQKE aimed to provide further evidence that XRP was indeed regarded as a utility token by the EU. He presented a research paper from the Center of Applied Macroeconomic Analysis at Crawford University, citing a report from the U.K. Financial Conduct Authority (FCA), which called XRP a utility token.
Further confirmation that XRP will be covered in MiCa Regulation:👇👇
FCA has RECOGNIZED XRP as a UTILITY TOKEN. 🧩
The MICA crypto regulatory framework directly covers UTILITY tokens. ✅ https://t.co/hZaZCJ7EQK pic.twitter.com/er8DULsRW9
— SMQKE (@SMQKEDQG) June 7, 2024
Nonetheless, it bears mentioning that the Financial Conduct Authority is not an EU financial agency. This is due to Brexit and the United Kingdom’s exit from the European Union in January 2020. Consequently, the U.K.’s views and regulations on finance and crypto assets are different from those of the EU.
The Significance of XRP Standing in the EU
The EU’s position on whether XRP is a utility token is pivotal for XRP’s regulatory standing within the bloc. This would be important for how companies in the EU treat or adopt XRP, especially within the MiCA regulation that is set to come into effect later this month.
The level of XRP’s institutional adoption largely depends on its regulatory standing within any jurisdiction. It faced a setback in the United States when the U.S. SEC declared it an unregistered security. Its adoption in the EU could also face a roadblock if the bloc’s regulatory stance is not resolute.
However, despite the findings from SMQKE, the European Union’s stance on XRP’s position remains unclear at the reporting time. Notable XRP community figure WrathofKahneman previously spotlighted a report from the European Corporate Governance Institute, which cited the July 2023 ruling that declared XRP a non-security when sold on exchanges.
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
Interestingly, Ripple’s Managing Director for Europe and the U.K., Sendi Young, disclosed last year that the company has continued to expand into the European Union. According to him, the introduction of MiCA could help with regulatory clarity for Ripple’s European expansion efforts.
