While regulatory uncertainty permeates the crypto industry currently due to the United States suddenly taking an aggressive and negative stance against the digital asset class, in the UK, Ripple (XRP) has gained sudden clarity alongside Bitcoin and Ethereum.
According to new classifications revealed by the Financial Conduct Authority, Ripple joins the other two most dominant crypto assets on the market, in being classified as an exchange or utility token instead of the more damning security token classification.
XRP Classified As Exchange or Utility Token By Financial Conduct Authority
Ripple’s Global Head of Government Relations Michelle Bond recently revealed news that the UK’s financial market conduct regulator the Financial Conduct Authority, has classified Ripple as an exchange or utility token in its latest report, removing the possibility of being labeled a security token. Being labeled a security token could come with additional scrutiny.
Related Reading | United States Regulators Begin Crack Down on Crypto and Bitcoin Crime
The report compares Ripple to Ethereum most closely, saying that “XRP has similar features,” such as being used as a “means of ‘payment’ (exchange token)” or to “run applications (utility token).” Bitcoin is an example of another crypto asset that the FCA classifies as an exchange or utility token, providing investors with regulatory clarity.
.@TheFCA now lists XRP in the company of BTC and ETH, both of which were previously classified as exchange and/or utility tokens (and not a security token). This is exactly the kind of regulatory clarity the industry needs. https://t.co/lCr3Bm0JRk https://t.co/RI8rea7MaK
— Michelle Bond (@michellebond111) August 12, 2019
The Financial Conduct Authority is a financial market regulator first established in 2013 that operates independently from the UK government and is instead funded by the fees generated from the some 58,000 financial firms it regulates. The regulatory entity’s purview covers creating the guidelines that financial markets and firms operate under, overseeing the consumer credit industry, and the firm has the been granted the power to freeze assets of any financial market participants it investigates, even before they are found guilty.
Ripple Is the Crypto Asset For Banks and Financial Regulators
While Bitcoin and Ethereum are decentralized crypto assets that were created on the idea that government control is bad for financial markets, and that people should be in charge of their own assets.
XRP, on the other hand, was created by Ripple, a financial firm seeking to disrupt the cross-border settlement market. XRP is the native crypto token for the Ripple protocol. And while it’s being classified under the FCA as being an exchange or utility token similar to Bitcoin and Ethereum, the crypto community see Ripple’s control over XRP similar to the control current financial market organizations have over money and assets, making it a poor choice given the original cryptocurrency ethos.
Related Reading | Ripple Sides With US Regulators on Crypto Controversy and Facebook Libra
But it’s because Ripple does have a corporation behind it, and a Global Head of Government Relations to help ensure they comply with important financial market regulators like the FCA. In the United States, Ripple’s close ties to the banking industry here in the have helped it stay in favor over other crypto assets like Bitcoin and Ethereum in terms of getting the world of traditional finance to welcome crypto with open arms.