Ripple CTO David Schwartz Pushes Back Against Claims That XRP Is a Security Under the IMF's New Classification Framework

The debate emerged following the IMF's latest revision of its Balance of Payments and International Investment Manual (BPM7)—the first major update

In a recent development, Ripple’s Chief Technology Officer, David Schwartz, has pushed back against claims that XRP should be considered a security under the International Monetary Fund’s (IMF) newly updated financial classification framework.

The debate arose after the IMF completed the latest revision of its Balance of Payments and International Investment Manual (BPM7). This is the first major update since 2009, and it formally integrates cryptocurrencies into the global financial reporting system.

The update, which began in 2009, also sparked discussions regarding the classification of various digital assets, including Ripple’s XRP.

However, Schwartz challenged the IMF’s definition of utility tokens, which he believes could be misconstrued to suggest that XRP qualifies as a security.

According to BPM7, digital assets are categorized based on whether they create a financial claim or liability for their issuer. For instance, Bitcoin is excluded from this classification due to its decentralized mining mechanism.

But the IMF’s stance implies that utility tokens, commonly used to facilitate access to digital goods and services, could be categorized as debt securities. This claim has fueled speculation about XRP’s status.

Responding to online commentary that joked, “XRP is about to be permanently labeled a security,” Schwartz made a critical observation.

If XRP fits this description simply because it can be used for transaction fees, then Bitcoin and Ethereum would also qualify under the same definition.

If XRP is a utility token because you can use it to pay future transaction fees, then so are BTC and ETH.

— David "JoelKatz" Schwartz (@JoelKatz) March 23, 2025

His comments raise a broader question about the IMF’s classification system—one that could inadvertently place major blockchain networks like Ethereum and Solana under the same regulatory scrutiny.

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Are Any Major Cryptos True ‘Debt Securities’

Schwartz further noted that, based on the IMF’s definition, no widely recognized cryptocurrency truly fits the criteria of a security-like utility token.

His response reflects concerns that broad-stroke regulatory definitions could mischaracterize the actual function of these assets.

This latest debate over XRP’s classification unfolds against the backdrop of Ripple’s ongoing legal battle with the U.S. Securities and Exchange Commission (SEC).

The lawsuit, which began in 2020, revolves around whether XRP was unlawfully sold as an unregistered security. A pivotal court ruling in 2023 found that while Ripple’s direct sales to institutional investors violated securities laws, its broader programmatic sales did not.

As the case nears its conclusion, Ripple’s legal stance—and regulatory clarity on how digital assets are classified—could shape the future landscape for XRP and the broader cryptocurrency market.

: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.

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