Attorney John Deaton Defends XRP Against Claims of Being a ‘Centrally Controlled Security’

The ongoing divide between the XRP and Bitcoin communities have deepened amid discussions about which assets should be included in the proposed U.S. strategic crypto reserve. Technology entrepreneur Jason Calacanis weighed in, taking to X (formerly Twitter) to assert that XRP is a “centrally controlled security.”

In his post, Calacanis questioned the legitimacy of XRP as a decentralized asset, stating, “If the SEC allows it to trade like Bitcoin, then securities law will be worthless.” He warned that allowing XRP to operate like Bitcoin could create chaos in the markets, with potential for startups and funds to offload large amounts of coins on retail investors, causing instability.

Calacanis also argued that such chaos would not benefit the U.S., as the country is known for its stable and controlled markets, which attract global investments. He suggested that if XRP could only be traded by individuals who pass an “sophisticated investor test,” it would ensure that people are educated about the risks before investing too much into projects like XRP.

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Crypto Community Fights Back

However, Calacanis’ comments have sparked criticism from various corners of the crypto world. John Deaton, the founder of Crypto Law, responded with a rebuttal, sharing a document that argued XRP, as a digital token, does not meet the legal requirements to be classified as an investment contract under the Howey Test. Deaton said that XRP is not a “contract transaction or scheme,” countering Calacanis’ view that XRP is a centrally controlled security.

Another user pointed out and wrote,

“Trump doesn’t care about investor protections – look at his approach to CFPB and other depts that lookout for these issues. Instead, he wants to provide big money with opportunities to fleece the sheep.”

As the debate continues, the future of XRP in the U.S. crypto scene remains uncertain, with ongoing discussions about its regulatory classification and potential inclusion in national crypto reserves.