A paper intended to classify tokens into 3 categories has grouped Ripple’s XRP with Bitcoin as Payment Tokens based on the services the two currencies offer in the finance industry. Released by the Luxembourg Private Equity and Venture Capital Association(LPEA) on April 1st, the paper handed XRP a major boost in Luxembourg and beyond, stating that the native token of Ripple blockchain technology, alongside Bitcoin, is not a security but a Payment Token.
LPEA serves as a representative for private equity and venture capital professionals in the country, and it plays a leading role in the development of the country’s investment framework.
LPEA claims XRP and Bitcoin are different from other tokens around the world. The release further reckoned that the two assets, due to the services they offer, can be used for immediate purposes such as transaction.
The LPEA Young PE Leaders Legal working group alongside some other firms like Allen & Overy, Clifford Chance, EY, PwC, Stibbe and Wildgen, carried out the study on “Security Tokens – Legal Aspects” based on the alarming ICO issues surrounding digital assets.
In the first category -Payment Token, LPEA regarded digital assets as tokens that can serve as a means of money or value transfer as well as payment for goods and services. Payment Tokens are not to be related to a particular asset or service, the report says.
LPEA said, in this category, “Token holders have no right to claim against the issuer of the token,” as there seems to be no issuer for tokens in common sense since it is formed on decentralization with no control.
Unlike legal tender, Payment Tokens according to LPEA are not issued and have no connection with central banks. LPEA said Payment Tokens like Bitcoin and XRP can be assimilated as a means of exchange just like gold. However, other categories include Asset tokens and Utility tokens.
LPEA has 170 members, and it disposes of a stable tax regime. The organization is a vanguard of “international PE regulation providing a flexible, secure, predictable and multi-lingual jurisdiction to operate in.”
