A broker’s perspective on SEC v. Ripple: “Doesn’t really matter to us if XRP is a security or not”
When asked on how the lawsuit will play out, it is difficult to say but it is not clear if the markets care about it: “It looks like they just want this case settled.”
As the lawsuit gets closer to one of its key events – the deposition of ex-SEC Director of Corporation Finance William Hinman – we turned to the trading industry to find out their thoughts on the matter.
Different groups have different perspectives about the same issue. For regulators, it is about enforcing the law. For blockchain companies, it is about regulatory clarity. For investors, it is about the price of the asset. For intermediaries such as brokers, it is about being able to offer the best possible trading experience.
We spoke to Natalia Zakharova, Head of Sales at FXOpen, to first understand how differently has the XRP traded since the lawsuit.
“We have seen a sharp increase in trading volumes related to an increase in volatility. There was (and still is) a lot of interest both from institutional investors looking to hedge their positions and retail traders, willing to benefit from the sharp market movements”.
FXOpen offers trading of the XRP/USD CFD in a time that Ripple is in the middle of a lawsuit with the SEC, prompting crypto exchanges in the US to restrict that instrument until further notice.
Can the upcoming deposition in SEC v. Ripple drive XRP and ETH prices?
“The lawsuit sent waves of volatility across trading venues, which is obviously good for brokers. However, we immediately saw restrictions coming from some of our LPs, exchanges delisting XRP, and us having to adjust our risks accordingly.
“Fortunately we were able to maintain tight pricing, mostly due to our technology which allows all market participants to act as price makers and thus ensure good liquidity levels”, said Ms. Zakharova.
“XRP is a convertible digital currency, in other words, a measure of value”
The FXOpen executive then explained how much impact the SEC v. Ripple lawsuit has on the whole crypto ecosystem as it sets precedent for other potential lawsuits against other cryptocurrencies.
This case can also help fill the regulatory gap that is present in the crypto space and provide direction to the crypto developers on how to launch cryptos without triggering the securities laws.
Is XRP a security? “As a broker offering CFD trading we can say that it doesn’t really matter to us if XRP is a security or not”, she first explained, only to then clarify that Ripple Labs is currently already complying with US currency laws.
“XRP is a convertible digital currency, in other words, a measure of value. This was established back in 2015 when Ripple Labs and Department of Justice reached the settlement obliging Ripple to comply with US currency laws, as opposed to securities laws.”
Natalia Zakharova then said XRP holders do not benefit directly from the performance of Ripple Labs and the market value of XRP does not correlate directly with the profitability of Ripple Labs.
When asked on how the lawsuit will play out, it is difficult to say but it is not clear if the markets care about it: “It looks like they just want this case settled.”
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SEC v. Ripple: “SEC is desperate for this deposition not to go forward. Desperate”
SEC v. Ripple: Will the lawsuit turn against Ethereum?
