SNEAK PEEK
- Bill Mogan has clarified the legal status of XRP sales to ODL customers.
- Transfers involved in Liquidity Hub have no connection or impact on the United States.
- The Liquidity Hub functions as a standalone option.
A digital asset enthusiast and legal expert, Bill Mogan, has gone to Twitter to clarify how transactions through the Ripple liquidity hub are less legally permissible than sales to ODL customers. According to Bill, sales to ODL customers do not qualify as securities since they immediately utilize XRP rather than invest in it.
Sales to ODL customers are not securities as those customers are immediately using not investing in the XRP they acquire and the transfers in any event probably don’t concern or touch the US. Liquidity Hub I assume is meant to be available for US customers https://t.co/RdjkUQUrLE
— bill morgan (@Belisarius2020) April 15, 2023
Furthermore, any transfers involved likely have no connection or impact on the United States. Bill also assumes that the Liquidity Hub is intended for use by US customers. One commenter, however, believes it matters who sells to ODL customers.
SEC and USTreasury will view distributions of XRP by an “underwriter” or “insider” as a form of evasion of law, at best, (SEC: securities, FinCEN: Bank Secrecy Act) when significant qty of XRP is sold for profit
In response, Bill states that while the issue of deemed statutory underwriter has been considered, it must first be established that XRP qualifies as a security for distribution through a statutory underwriter to be relevant. However, since ODL customers are not investing in XRP or participating in a joint enterprise with Ripple, it cannot be classified as a security in the first place.
Notably, this comes in the wake of Ripple’s newly introduced business liquidity solution to bridge the gap between cryptocurrency and fiat. Following a successful trial last year, the Ripple liquidity hub was opened on April 13.
In addition to Ripple’s well-known on-demand liquidity (ODL) cross-border payments service, the service functions as a standalone option. This transforms it into a global liquidity network that gives its partners access to payment rails around the globe.
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- Source: https://investorbites.com/xrp-sales-to-on-demand-liquidity-users-not-securities-legal-expert/