The two altcoins that have the most value are apparently non-complaint securities. This is under a new US law and a market regulator has worked to try and confirm this. Gary Gensler who is a previously listed head of the CFTC has stated that he believes Ether/XRP have been given through a huge range of unregistered securities and that they are illegally trading on the various exchanges. Gensler chaired the CFTC for five years and this was during the Obama era. He also served as chief financer for Hillary Clinton during her campaign. He currently works as a blockchain researcher at MIT and it was here where he works as a special advisor to Media Lab. He is known for working part-time as a senior lecturer at the Sloan School as well. He believes that there is a strong case for both Ethereum and Ripple but he also believes that Ripple is mostly classed as being a non-compliant security.
He states this because both of the cryptocurrencies have been sold by the people who created them, and the currency was originally purchased as being an investment for purely speculative reasons. Bitcoin on the other hand was never issued in this manner and therefore is not likely at all to be seen as a security. Of course, this is unlikely to be deemed as a security by those who work as regulators and the main reason for this is because it was bootstrapped as an initial coin presale in the year 2014. Investors who did go on to purchase units from Ether were then distributed the following year.
After this initial distribution, many more units of Ether have been seen on the market and this is all down to mining. That being said, Ether now control less than 1% of the total supply that they have. The officials who work at Ether have stated that they are not going to assure the fact that an industry working group is backed by venture capital firms. They are also not going to comment on the fact that Ether is not actually an unregistered security.
Gensler believes that because Ethereum has been functional for quite a few years now, they have gone on to develop a highly decentralised structure. They also believe that they have a much higher chance of evading the non-compliant security label when compared to XRP and even most ICOS. XRP is known for being created by Ripple and they issue tokens at their own discretion. They do this through grants, sales and numerous other centralised means. Coinbase have even suggested that they don’t think that there is any certainty that prevents it from being listed as a token.
XRP does not give its owners a stake in Ripple and they are not paid in dividends either. The spokesman for Ripple has told NYT that XRP is not related to Ripple and that it was created way before. He has also stated that it will continue to exist long after Ripple as well.
Gensler on the other hand has stated that he believes 2018 will be a reckoning for the world of cryptocurrency. He believes that regulators are going to take a much more active approach when it comes to policing ICOS and any other token sales that may be present. Gensler has also said that there have been over 1,000 issued coin offerings and these need to sort out how they are going to work in compliance with the United States security laws.