The US Securities and Exchange Commission (SEC) soon have to make a vital decision on whether digital tokens should be classed as securities. Owners of virtual investment firms are laying into one of the leading cryptocurrencies in the market, XRP – saying it is really just a digital fiat. This criticism is mainly focused on the role of centralised nature of the popular digital currencies tokens distribution model plays in it’s eventual classification. With an intention of monetary gain, the collective pooling of investments is central to the definition of a security. In fact, the SEC is already saying that initial coin offerings fit to that description. As such, initial coin offerings are already quite strict on regulations. So much so that in the US it’s close to non-existence. The SEC has already ruled out Bitcoin and Ethereum saying that they are NOT securities, but token based Ethereum can be classed as a security. The chairman of the SEC, Jay Clayton answered the question on whether XRP is a security or cryptocurrency saying:

“Cryptocurrencies: these are replacements for sovereign currencies, replace the dollar, the euro, the yen with Bitcoin. That type of currency is not a security.”

Many big names in the industry are being given the impression that XRP is going to labelled as a security.  This could have a huge impact for the future of Ripple Labs. The CEO of Elpis Investment, Anatoly Castella believes that XRP is not a real cryptocurrency and so it shouldn’t be treated as one. He goes on to say that it doesn’t fit with the world ‘purest interpretation’ of the word. He also calls for a third category for virtual assets such as XRP to make sure that real cryptocurrencies aren’t negatively affected by the backlash of XRP related issues:

“Ripple has no mining or miners whatsoever. Instead, transactions are powered through a centralised blockchain to make it more reliable and fast. XRP was mined all at once by the parent company – Ripple Labs Inc – with a majority of the cryptocurrency held by them.”

Ripple posted a picture on their Twitter account clearing up the difference between Ripple and XRP. They say that XRP:

“Is an independent digital asset. The XRP Ledger is the open source blockchain technology behind it.”

And that Ripple is:

“A technology company that provides the most efficient solutions for sending money globally.”