A former U.S. Securities and Exchange Commission (SEC) member Michael Didiuk talked about Ripple (XRP). He argued that the third largest cryptocurrency by market cap is a currency rather than a security. Didiuk gave a number of reasons to support his claim.

Didiuk cited the Howey (a 1946 Supreme Court case) which outlined four main criteria in deciding whether or not an asset is a security. The four factors cited by the former SEC member include:

It must be an investment of money

There’s an expectation of profits from the investment

Profit comes from the effort of a third party or promoter

Investment of money in a common enterprise

He said:

“I don’t think XRP is a security, I think XRP is a currency. The reason why is […] Howey test… it’s a 4-factor test – an investment of money in a common enterprise with the expectation of profits based on the efforts of others.”

If one of the factors is not present, then it cannot be classified as a security, according to him. He went on say XRP will continue to exist and operate independently. It only facilitates transactions on the Ripple network. In such a case, therefore, there may not be a third party promoter, thereby making XRP a non-security asset.

One of the most popular names in the cryptocurrency space Steven Diep responded to Didiuk’s observations. He tweeted:

“Pay attention to the reaction of the regulators, they laugh. Claiming XRP being a security sounds stupid from the get go.”

Earlier this week, Ripple’s Swell Conference 2018 kicked off in San Francisco California. A couple of big names including former U.S. president Bill Clinton and advisor to former U.S. president Barack Obama graced the event. Ripple unveiled their groundbreaking product xRapid at the event. Ripple CEO Brad Garlinghouse even claimed that Ripple payment network is 1000 faster and cheaper than Bitcoin and Ethereum.