In an Aug. 14 post on X, David Schwartz stated that the determination in the XRP case was based on whether a court is “confined to look at the formal terms of a single contract to determine if it is an investment.”
- In Schwartz’s opinion, the key takeaway from the XRP ruling is that when applying the Howey test to establish whether an asset is a security, regulators cannot limit themselves to a superficial examination of a contract’s content.
The issue in Howey was whether the court was confined to looking at the formal terms of a single contract to determine if it was an investment contract. The holding is that you can’t *just* look at the contract, not that there doesn’t have to be a contract.
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- In other words, the Howey test doesn’t imply that the requirements for a contract are waived altogether but that a comprehensive analysis beyond just the contract’s formalities is needed to determine whether it is a security.
- Schwartz’s statement comes in the wake of the SEC announcing that it will appeal XRP’s partial victory against it.
- The legal battles have taken their toll on XRP’s price. Investor’s confidence has waned following the SEC’s notice of appeal, which has caused a build-up of selling pressure and a 33% drop in the value of XRP in the last weeks.
- However, the token seems to have shaken off some of the market’s languor, with analysts observing a golden cross on XRP’s three-day chart for the first time since December 2020.
- It is the third time in XRP’s history that the golden cross has appeared on its charts. On the other two occasions, it preceded impressive bull runs, including a 12,437% price hike that saw XRP reach an all-time high of $3.317.
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