In a recent Twitter post, Fox Business’s Charles Gasparino claimed that sources at the US Securities and Exchange Commission told him that the reason Ethereum is not recognized as a commodity by the regulator is the built-in infrastructure of the blockchain, which has been in operation for years.
BREAKING (1/2): @SEC_Enforcement sources tell @FoxBusiness the logic of the agency’s case v @Ripple is that the company’s infrastructure is STILL being built out so XRP — the token which was used to finance the thing — is considered a security. @ethereum infrastructure is
— Charles Gasparino (@CGasparino) September 15, 2021
On the other hand, in Gasparino’s words, Ripple is still building the company’s infrastructure and using the XRP token to finance the company. Gasparino thinks this is the reason why the SEC claims that the cryptocurrency is actually an unregistered security.
In March 2020, Ripple CEO Brad Garlinghouse told the Financial Times that the company would not be profitable without selling the token. According to the SEC complaint, Ripple stated in its 2013 whitepaper that its business model is based on the success of XRP. This was the starting point of the case.
Not surprisingly, Gasparino’s statement did not satisfy members of the XRP community, with many objecting to the word “build”. Because; Ethereum is currently in the process of transitioning to a proof-of-stake model.
Ripple and the XRP community are demanding answers about the SEC’s internal negotiations regarding digital assets.
The testimony of William Hinman, a former senior official of the SEC, who claimed in his 2018 speech that ETH is not a security, took place on July 27. Ripple relied heavily on this talk, where Hinman said that Bitcoin and Ethereum are not securities. But during his testimony, Hinman said that he had actually warned Ripple about XRP and advised the company to stop selling it.
The SEC turned away from Hinman’s speech, and Ether’s securities status remained unclear. In August, SEC Chairman Gary Gensler also declined to comment on whether the cryptocurrency is an unregistered security.