Amid the ongoing battle between the U.S. SEC and cryptocurrency exchange giant Coinbase, Ripple's Chief Technology Officer David Schwartz has entered the fray, bringing a fresh perspective to the heated debate over what constitutes a security.
The controversy was sparked when Paul Grewal, chief legal officer at Coinbase, posted a provocative statement asserting that "baseball cards would be securities under the arguments made by the current leadership of the SEC." This unleashed a torrent of opinions on social media, with one participant recalling a 2017 comment by an SEC staffer who questioned why baseball cards were not considered securities.
As the debate unfolded, David Schwartz, an architect of XRP Ledger and CTO at Ripple, took center stage, challenging traditional notions. Schwartz argued that the value of baseball cards, like other collectibles, is intricately tied to the efforts of promoters and scarcity maintenance.
He questioned the assumption that the value of existing cards would not drop if a million more were printed, emphasizing the role of promoters in determining scarcity and collectible status.
Not stopping there, Schwartz extended his critique to art, challenging the idea that paintings and early works are not subject to speculative investment. He contended that buying art early in an artist's career is a form of speculation on the potential increase in value through future works and promotions.
It is interesting how Schwartz, despite the fact that Ripple and XRP have taken a beating from the SEC over the past three years, has not taken a categorical side against the regulator, but instead objectively notes the reasons why things like baseball cards and art can be regulated as securities.