Is XRP a “Note”? Exploring The “Reves Test” With Chris Giancarlo…

November 26, 2021 11:13 am Comments

All we’ve heard for the past year when it comes to Ripple and XRP is “security” and “Howey Test”.

But did you know there’s actually another possibility?

Instead of a Security, something may very well be a “Note” and be governed by the “Reves Test”.

You might be surprised to learn that Hester Peirce and Gary Gensler have both talked about this as well.

Here is Peirce (listen to the end):

And believe it or not here is even Gary Gensler (start at 1:25):

Who else has talked about this possibility?

How about Chris Giancarlo, former chairman of the Commodity Futures Trading Commission (CFTC).

Check out this article from Forbes where Giancarlo speculates XRP may indeed fit the definition of “Note” much better than “Security”:

When Chris Giancarlo was the chairman of the Commodity Futures Trading Commission he became a rock-star of sorts in certain corners of the cryptocurrency community, helping establish criteria that eventually led to bitcoin and ethereum being declared commodities, more like coffee or sugar than stock in a company. The U.S. Securities and Exchange Commission largely followed suit, eventually also declaring that bitcoin and ether, the cryptocurrency powering the ethereum blockchain weren’t securities.

Now chairman emeritus Giancarlo, who was deemed “Crypto Dad” following an impassioned speech he gave to Congress where he credited bitcoin for finally getting his kids interested in finance, is at it again, having co-written a detailed argument published this morning in the International Financial Law Review for why XRP, the cryptocurrency formally known as “ripples,” was also not a security. The only problem is he’s no longer a regulator. In fact, his employer is on the payroll of Ripple, the largest single owner of XRP, whose co-founders actually created the cryptocurrency.

The bombshell paper, titled, “Cryptocurrencies and U.S. Securities Laws: Beyond Bitcoin and Ether,” co-authored by commodities lawyer Conrad Bahlke of New York law firm Willkie Farr & Gallagher LLP, methodically reviews the criteria of the Howey Test, established by the SEC in 1946 to determine whether something is a security, and point-by-point argues that XRP does not qualify. Rather, the paper argues, like its name would indicate, cryptocurrency is a currency of perhaps more interest to the Federal Reserve and central banks than securities regulators.

What’s at stake here to the cryptocurrency world cannot be overestimated. XRP is now the fourth largest cryptocurrency by market cap, with $5.9 billion worth of the asset in circulation according to cryptocurrency data site Messari. While Ripple was valued at $10 billion according to its most recent round of funding, the company continues to fund itself in part by selling its deep war chest of 55.6 billion XRP, coincidentally valued at the same amount as the company itself.

Not only could an eventual decision by the SEC to classify—or not classify—XRP as a security impact the untold individual owners of the cryptocurrency, but other clients using Ripple services that don’t rely on the cryptocurrency, including American Express, Santander, and SBI Holdings could stand to be impacted positively or negatively depending on the decision. After all if XRP were to be rescinded it would be a huge cost to their software provider. If Giancarlo is right though, Ripple could end up being one of the most valuable startups in fintech.

“Ultimately, under a fair application of the Howey test and the SEC’s presently expanding analysis, XRP should not be regulated as a security, but instead considered a currency or a medium of exchange,” Giancarlo and Bahlke argue in the paper. “The increased adoption of XRP as a medium of exchange and a form of payment in recent years, both by consumers and in the business-to-business setting, further underscores the utility of XRP as a bona fide fiat substitute.”

You need to read the entire paper by Giancarlo and Bahlke where they evaluate every element of the “Howey Test” and determine XRP does not fit virtually any element of that test.

Instead they conclude the following:


Here’s more, from Bitboy and Brad Kimes:

Is the whole world starting to piece together how this all plays out?

Endgame coming soon?

Clarity coming soon?

In a Hollywood-esque twist of fate, will XRP end up soon becoming the “only” coin with regulatory clarity?

Will it be conclusively deemed “not a security” and perhaps instead a Note?

You know, kind of like these used to say? 👇

New financial system incoming?

We’ll continue to watch and see and keep you updated right here at

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