Michael Didiuk who is a former employee of the US Securities and Exchange Commission addressed the nature of XRP.
He said that the crypto is not a security, but a currency and he also made sure to justify his statement.
Using the Howey test to prove the nature of XRP
Didiuk mentioned the Howey test that was laid out by the Supreme Court back in 1946 which determines whether an asset is a security based on four elements.
The four factors included mentioned by the former SEC employee include the following: the investment of money, a common enterprise, expectation of profits, and the efforts of a third party or a promoter who is doing everything to push that profit.
“I don’t think XRP is a security; I think XRP is a currency. The reason why is […] Howey test… It’s a 4-factor test – Investment of money in a common enterprise with the expectation of profits based on the efforts of others,” he said.
According to Didiuk, if one of these factors is absent from the financial entity that is being discussed, this means that it is not a security.
He applied this to XRP and stated that the coin would continue to exist and function without Ripple.
Therefore, it seems that there may not be a third-party promoter in this case, so XRP is not a security.
Earlier this week, Ripple enjoyed its Swell 2018 conference which took place in San Francisco on October 1 and 2 where a lot went down.
The company also announced the launch of xRapid, its XRP-based product which can trigger boosted adoption of the crypto.
#XRP is not a security. It is a currency. #Ripple could go away and XRP would still exist.