The former acting Comptroller of the Currency is offering his take on the legal battle between the SEC and Ripple.
Brian Brooks tells Coindesk.TV he believes the case could come down to the status of XRP today, and whether it is a security today, and not what its status may have been 10 years ago.
“There’s a difference between the way in which an asset is distributed and the nature of the asset at a given moment in time.
And I think the issue with Ripple that gets lost in all of the discussion is whatever happened in the original distribution of XRP tokens ten years ago and whether that was or wasn’t an unregistered securities offering – that’s what the courts will decide – that’s a different question from whether XRP today is a security. And the SEC itself has said that assets can change their nature over time as they achieve utility and as they achieve decentralization.”
Brooks predicts that some type of settlement will be reached that will allow crypto companies to legally resume XRP trading in the US.
“I’ll just make a quick prediction, and that is that there is a settlement to be done here somewhere. The settlement has to do with the distribution of the tokens so that existing token holders can continue to trade them and find value in the way that they do.”
During his time as chief legal officer at Coinbase, Brooks says the exchange relied on a rating system to judge the risk of a token. He says XRP was considered to be on the higher end of the risk spectrum.
“When I was at Coinbase we organized something called the ‘crypto rating council,’ the point of which was to risk rate these tokens from a securities law perspective and the idea was to be a little bit like a motion picture association where we weren’t saying that PG tokens were better than R rated tokens, but we were saying R rated tokens are riskier.
And what we said about XRP was, listen, compared to Bitcoin and ETH, it has more hallmarks of a security but we believed it was still distinguishable from classic securities so it was farther along the spectrum but we did not regard it as all the way off the other side. Now once SEC filed the lawsuit that of course changes the risk calculus… We gave it a rating of 4 or a 4.5 on a 5 point scale, so not a 5, but definitely not a 2.”
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