While the issue of regulatory uncertainty lingers in the crypto industry as a result of the United States’ sudden decision to take aggressive steps and a negative stance against crypto, Ripple’s XRP has now gained clarity in the UK. The asset class has joined fellow top cryptos Bitcoin and Ethereum to achieve this.
XRP (XRP) Price Today – XRP / USD
According to the new electronic currency classifications that were issued by the FCA (Financial Conduct Authority), XRP joins the rest of the top three most dominant digital assets in the market, to be classified as a utility or exchange token. This is opposed to been classified as securities token which would have been a more damning outcome.
UK Regulator Classifies XRP an Exchange or Utility Token
Recently, Michelle Bond, who serves as Ripple’s Global Head of Government Relations, revealed that the Financial Conduct Authority (UK’s financial market conduct regulator) has classified XRP as an exchange token. The regulatory authority did this classification in its most recent report. This move has removed the possibility of XRP being tagged securities token. Of course, if XRP is labeled a security token, the asset class could suffer more scrutiny from policymakers.
Per the report, Ripple and Ethereum are closely compared. At this point, it was found that “XRP has some features that make it similar to Ethereum.” One such similarity is its usage as an exchange token (as a means of payment) or as a utility token (to run apps). Bitcoin is a good example of another asset that has been classified by the FCA as a utility or exchange token. This has given investors the regulatory clarity they desire in the UK.
The FCA is a UK financial market regulator that was established in 2013. The organization is independent of the government. It is funded by fees generated from the financial firms under its regulatory radar. The entity’s purview covers creating guidelines for financial markets and firms. It also encompasses the oversight of the consumer credit sector. The regulator holds the power to freeze assets held by financial market participants under investigation even before a guilty verdict.
Ripple’s XRP is the Perfect Crypto For the Banking Sector
While assets like Bitcoin and Ethereum have a decentralized framework (that is they were created based on the idea that government management is bad for the financial markets), that people should take charge of their assets, XRP is designed to facilitate cross-border settlements.
XRP, the native crypto for Ripple, while being classified as an exchange token under the FCA, the crypto community see the control that Ripple has over XRP similar to the type of control the current financial markets have over fiat and other assets. This makes it a poor choice considering the original ethics behind cryptocurrencies.
In the U.S, XRP’s Close Ties to the Banking Sector Has Kept it the Good Books
Because Ripple has a corporation behind it, as well as a Global Head of Government Relations working in its favor, the network remains on the good side. The job of the Global Head of Government Relations is to ensure the network’s compliance with financial market regulators. Ripple’s close ties to the banking sector in the United States has also kept it stay in favor. The asset is favored over other cryptos like Bitcoin and Ethereum when it comes to getting the traditional finance world to openly welcome crypto.