Cardano (ADA) co-creator Charles Hoskinson says that the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Ripple Labs is absurd.
The SEC sued Ripple Labs in late 2020 under allegations that the firm issued XRP as an unregistered security.
In a lengthy thread, Hoskinson tells his 950,500 Twitter followers that he doesn’t believe layer-1 protocols count as securities as they are too decentralized and have real-world utility.
He also says that investors speculating on assets doesn’t automatically qualify them as securities.
“I’ve always taken a position that most layer-1 protocols aren’t securities because it’s bizarre and senseless to consider something that offers utility, is decentralized enough to have operators and builders throughout the world, and survives its founders passing [the Howey test].
People speculating on oil doesn’t make oil a security anymore so than baseball cards. You can always securitize oil or baseball cards, but then you have obvious issuers and information asymmetries.”
The Cardano creator goes on to say that commodities regulations are better suited for the crypto industry than securities regulations and that the XRP Ledger can survive on its own for decades without a central governing entity.
“Cryptocurrencies aren’t immune to regulation. Markets need to be stable, well-functioning, trusted actors monitored, and cartels examined. Commodity regulation is principles based, market oriented, and global by nature. Commodities survive those who aggregate them.
Ripple created something that has an ecosystem that will survive [its executives] or anyone else. The very fact that there is an independent XRP army criticizing me is proof of this reality. The ledger will run likely for decades trading value.
The merits of the case should rest on the absurdity of applying securities regulation to something that has millions of independent participants in more than a 100 countries who cannot be controlled by any fiduciary of a single company.”
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