In a recent series of tweets, founder of IOG and Cardano Charles Hoskinson decided to clarify his stance on the SEC lawsuit against Ripple Labs, saying that he has been “hit hard” by some members of the XRP army for his recent comments on Ripple’s issues with the securities regulator.
He does not believe that XRP is a security and this suit against Ripple is absurd and that XRP should be regulated as commodity.
“Most layer 1 protocols aren’t securities”, "they are commodities"
Cardano founder wrote that he believes the majority of layer 1 protocols (which includes XRP) are not securities, since they offer utility and have a sufficient degree of decentralization in them, plus they pass Howie test which shows whether an asset is a security or not.
Basically, Hoskinson believes XRP to be a commodity, likening it to oil and even baseball cards. However, he warns, if you try to securitize oil or cards, you have “obvious issues and information asymmetries”.
I've always taken a position that most layer 1 protocols aren't securities because it's bizarre and senseless to consider something that offers utility, is decentralized enough to have operators and builders throughout the world, and survives its founders passing Howie (2/16)— Charles Hoskinson (@IOHK_Charles) October 8, 2022
Hoskinson admits that cryptocurrencies do need regulation to keep markets stable and well-functioning, actors must be kept an eye on and cartels need to be examined. It is regulation for commodities that suits here best, he stated.
Cryptocurrencies aren't immune to regulation. Markets need to be stable, well-functioning, trusted actors monitored, and cartels examined. Commodity regulation is principles based, market oriented, and global by nature. Commodities survive those who aggregate them (4/16)— Charles Hoskinson (@IOHK_Charles) October 8, 2022
“Ripple ecosystem will survive its creators”
Another argument given by Hoskinson towards XRP being a commodity is that “commodities survive those who aggregate them”. In the case of Ripple, he wrote that the company has created “something that has an ecosystem that will survive Brad [Garlinghouse, CEO], Chris [Larsen, former CEO, co-founder], David Schwartz (CTO) or anyone else”.
Full-scale criticism from XRP army towards himself, Hoskinson believes to be “proof of this reality”. XRP ledger, he adds, will operate for decades trading value, he added.
In his final tweet in the thread, he wrote about “absurdity of applying securities regulation” to XRP – “something that has millions of independent participants in more than a 100 countries who cannot be controlled by any fiduciary of a single company.”