Ripple’s CTO expresses uncertainty about whether XRP ODL sales are now classified as securities, following a recent court ruling. Further evaluation is being conducted by the company.
In a recent development following the U.S. District Judge Analisa Torres’ ruling that the XRP token is not a security, Ripple’s Chief Technology Officer (CTO), David Schwartz, expressed uncertainty regarding the status of XRP on-demand liquidity (ODL) linked sales post-judgment.
Ripple Secures Partial Victory Against SEC, Raises Questions On XRP Sales Classification
The ruling marked a significant but partial victory for Ripple and its defendants against the U.S. Securities and Exchange Commission (SEC).
Prior to the ruling, Ripple Labs had engaged in institutional and programmatic sales until the fourth quarter of 2019. The company ceased programmatic sales, and it has been reported that institutional sales were subsequently replaced by ODL-related sales. This transition has raised questions about whether these ODL linked sales could now be considered securities in light of the court’s decision.
CTO David Schwartz acknowledged these concerns and stated that Ripple is still in the process of determining the implications. Notably, he clarified that the company does not conduct ODL related sales with a U.S. nexus, implying that the potential impact on Ripple’s operations may not be significant.
Schwartz: US On-Demand Liquidity Not Dependent On Ripple-Sourced XRP
Schwartz explained that while the on-demand liquidity service can still be utilized in the United States, the XRP tokens used in the process do not necessarily need to be sourced from Ripple.
According to him, the key factor is that ODL customers are users who do not anticipate making a profit. However, he added that the expectation of profit is only relevant to a reasonable buyer purchasing from Ripple, rather than a reasonable ODL customer. This conclusion has raised some eyebrows as it seems to prioritize the perspective of a buyer rather than the customer using ODL.
Schwartz further elaborated that before the recent summary judgment ruling, Ripple executives might have believed that blind sales on an exchange would be more unfavorable than selling to sophisticated buyers for strictly consumptive purposes.
As Ripple continues to navigate the regulatory landscape and adjust its operations accordingly, the implications of the court ruling on XRP’s status as a security and its impact on ODL sales remain uncertain. The company is actively assessing the situation and working towards clarity on this matter.