During an Ask Me Anything (AMA) session, John Deaton was asked if Ripple could sell its XRP directly outside of the US following the decision of Judge Analisa Torres. The court previously ruled that direct sales of XRP are considered unregistered securities. Deaton confirmed that Ripple has always been able to legally sell XRP overseas without any legal issues.
The powers of the US Securities and Exchange Commission (SEC) are limited to the territory of the United States, the lawyer emphasized. Therefore, the regulator does not have the right to control the sale of XRP abroad. Previously, Ripple’s defense claimed that 95% of XRP sales were made outside the US. However, past US direct sales of XRP can indeed be problematic.
A member of the XRP community, using the pseudonym Digital Asset Investor on Twitter, cited a hypothetical situation as an example: let’s say Ripple sold XRP to a foreign institution – the Bank of England. The Bank of England could then transfer the XRP to a US institution such as Bank of America through an ODL solution. Will it be legal?
Deaton confirmed that the scheme would operate within the law. With ODL, institutions use XRP not as a security, but as an intermediate currency. The lawyer cited a speech by SEC Chairman Gary Gensler from 2018, when he was a professor at the Massachusetts Institute of Technology (MIT). Then Gensler said that three-quarters of crypto assets are not securities.
“If the Bank of England transfers or sells XRP to Bank of America, it does not count as an investment as institutions will only hold XRP for 3-5 seconds. Therefore, it is foolish to say that one of the organizations expects to make a profit in these seconds or relies on someone else’s efforts in anticipation of a profit. Such transactions with XRP do not meet any criterion of the Howie test, and therefore are not associated with securities,” Deaton said.
Earlier, the lawyer said that XRP and other altcoins, which the US regulator considers unregistered securities, are just codes in cyberspace, and therefore cannot fall into this category.
Source: Bits
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