The new proposal filed with the US Securities and Exchange Commission (SEC) is a newly established cryptographic task force by Maximilian Staudinger claiming XRP as a US “strategic financial asset” (using highly questionable mathematics and logic).
XRP is not a strategic asset, and I am here to convey that the logic of this proposal is questionable at best.
In the proposal, Staudinger says $5 trillion is trapped in US Nostro accounts, the accounts that banks use to pay across borders. He then argues that if certain regulatory terms are created, including the SEC that classifies XRP as a payment network, the US Department of Justice (DOJ) requires banks to use XRP as a driving obstacle, such as providing legal clearance for banks to use XRP.
So let’s break down why this makes little sense.
First, a Nostro account is a bank account held overseas by a US bank. I don’t know what logic these domestic banks include these logic in order to take over the US dollars that XRP theoretically replaces with the federal government.
Second, the proposal does not provide details on how these domestic banks will acquire XRP that replaces the dollar. It’s logical that they have to buy XRP, and XRP absorbs this $1.5 trillion, not bitcoin. Even if Ripple, the issuer of XRP, simply wanted to provide them to use these banks XRP, this still won’t work. XRP holds only about $100 billion.
Third, even if the price of Bitcoin drops to $60,000, the price will soon start to rise when the US government starts buying 25 million bitcoins.
Finally, there is a hard cap of 21 million bitcoins (and about 4 million lost). This is a well-known fact in Bitcoin or crypto space. So it’s pretty ridiculous to suggest that the US government can buy 25 million bitcoins. If the author was even half-serious, he might have suggested that the government buy 15 million bitcoins at $100,000 per bitcoin (although mathematics still doesn’t work).
Given how flawed the logic behind this proposal is, it is difficult to consider XRP as a strategic asset. What’s more, why does the US government do when two-thirds of its supply are still in the hands of the organisations that issued the assets? That doesn’t make much sense.
Bitcoin, on the other hand, is a globally diversified asset that many people around the world use as a store for both money and value. Furthermore, the Bitcoin network is managed by tens of thousands of nodes, and is virtually inviolable, thanks to about 0.4% of the world’s energy that protects it. (The XRP network is managed by 828 nodes and is not protected by any amount of energy.) These factors make Bitcoin a logical reserve asset.
So hopefully, the SEC already understands what I outlined in this work and doesn’t spend much time considering Staudinger’s suggestions.
This article is a take. The opinions expressed are entirely the authors and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
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