Ripple’s Chief Technology Officer, David Schwartz, has pushed back against claims that XRP should be considered a security under the International Monetary Fund’s (IMF) newly updated financial classification framework.
The debate emerged following the IMF’s latest revision of its Balance of Payments and International Investment Manual (BPM7)—the first major update since 2009. This update formally integrates cryptocurrencies into the global financial reporting system but has also sparked discussions regarding the classification of various digital assets, including XRP.
Schwartz Challenges IMF’s Utility Token Definition
Schwartz took issue with interpretations suggesting that XRP qualifies as a security under the IMF’s criteria for utility tokens. According to BPM7, digital assets are categorized based on whether they create a financial claim or liability for their issuer.
Bitcoin, for instance, is excluded from this classification due to its decentralized mining mechanism. However, the IMF’s stance implies that utility tokens, commonly used to facilitate access to digital goods and services, could be categorized as debt securities—a claim that has fueled speculation about XRP’s status.
Responding to online commentary that joked, “XRP is about to be permanently labeled a security,” Schwartz countered with a critical observation. He argued that if XRP fits this description simply because it can be used for transaction fees, then Bitcoin and Ethereum would also qualify under the same definition.
If XRP is a utility token because you can use it to pay future transaction fees, then so are BTC and ETH.
— David "JoelKatz" Schwartz (@JoelKatz) March 23, 2025
His comments raise a broader question about the IMF’s classification system—one that could inadvertently place major blockchain networks like Ethereum and Solana under the same regulatory scrutiny.
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Are Any Major Cryptos True “Debt Securities”?
Schwartz further noted that, based on the IMF’s definition, no widely recognized cryptocurrency truly fits the criteria of a security-like utility token. His response reflects concerns that broad-stroke regulatory definitions could mischaracterize the actual function of these assets.
This latest debate over XRP’s classification unfolds against the backdrop of Ripple’s ongoing legal battle with the U.S. Securities and Exchange Commission (SEC).
The lawsuit, which began in 2020, revolves around whether XRP was unlawfully sold as an unregistered security. A pivotal court ruling in 2023 found that while Ripple’s direct sales to institutional investors violated securities laws, its broader programmatic sales did not.
As the case nears its conclusion, Ripple’s legal stance—and regulatory clarity on how digital assets are classified—could shape the future landscape for XRP and the broader cryptocurrency market.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.
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