The UK released a report on cryptocurrencies and stablecoins to offer a more comprehensive view of its financial system.
According to official guidelines, the United Kingdom Treasury (Her Majesty’s Treasury) did not classify XRP as a security. Instead, XRP falls into the same category as Bitcoin (BTC) and Ethereum (ETH) and is classified as an unregulated token, which contrasts with the definition of the United States.
XRP, BTC and ETH are seen as cryptocurrencies used primarily as a medium of exchange. The report refers to them as “exchange tokens”, a subcategory of unregulated tokens.
The report released by the UK Treasury follows the pattern of The Financial Conduct Authority (FCA). He recognizes that cryptocurrencies are dynamic. O report it said:
“FCA’s guidance also makes it clear that many tokens can take a hybrid form and fall into different categories at different points in time – for example, they can be used initially to raise capital and later be used primarily as a medium of exchange . ”
The United Kingdom Treasury classified cryptocurrencies into three broad categories: digital currencies, securities tokens and unregulated tokens. This definition around XRP contrasts with how the token is viewed in the United States. Currently, the status of XRP in the USA remains unclear. While Bitcoin and Ethereum are seen as commodities, the Securities and Exchange Commission (SEC) claims that XRP is a security.
The UK is a friend of Ripple, the US
Previously, Ripple’s CEO praised the UK for its regulatory guidance for cryptocurrencies, saying that “the UK had a clear taxonomy” around it. Brad Garlinghouse applauded the UK Financial Conduct Authority for its leadership in characterizing how to think about different types of assets and how they can be used.
Ripple and the Bank of England (BoE) had long been known as partners, as the Central Bank of the United Kingdom had leveraged Ripple’s technology for its Real Time Gross Settlement System (RTGS). RTGS is the funds transfer system that allows the transfer of bonds and securities in real time.
Ripple has been actively working with central banks and looking for to help financial institutions to deploy central bank digital currencies (CBDC). Ripple has repeatedly evaluated its On-Demand Liquidity (ODL) and XRP Ledger services, which use XRP to bridge currencies between different fiats and provide efficient international transactions in real time. In addition, the XRPL is compatible with stablecoins, the utility of which was recognized by Bank of England governor Andrew Bailey for its transaction advantages and ability to reduce friction in payments.
Due to the US restriction on XRP, Ripple had also previously considered transferring its operations abroad. The United Kingdom is among the list of countries that the fintech company has considered. The executive chairman of Ripple criticized the cryptocurrency structure provided by the U.S. Securities and Exchange Commission and said he was light years behind the United Kingdom, China and other countries in terms of providing a regulatory framework for cryptocurrencies.