Ripple CTO David Schwartz Has Criticized Suggestions That XRP Is a Security

David Schwartz has rejected suggestions that XRP qualifies as a security based on the IMF's definition of a utility token.

Ripple's Chief Technology Officer, David Schwartz, has defended his stance on why XRP is not a security despite the International Monetary Fund's (IMF) definition of a utility token.

Last week, the IMF rolled out the first update to its Balance of Payments and International Investment Manual since 2009, introducing a framework for cryptocurrencies.

While the update underscores the increasing recognition of cryptocurrencies, the IMF's categorization of these assets has sparked discussions.

One such conversation regarding XRP prompted a response from Schwartz.

Ripple CTO Responds to IMF's Classification of Utility Tokens Like XRP

Schwartz has contested suggestions that XRP could be considered a security based on the IMF's definition of a utility token.

To provide context, the IMF's new Balance of Payment Manual, BPM7, classifies crypto-assets according to whether they impose a financial claim or liability on the issuer.

While the IMF argues that Bitcoin does not impose this liability due to the mining process, it suggests utility tokens—which the framework often refers to as altcoins—do.

The framework asserts that these assets are "debt securities" that offer holders future access to goods and services. This has led some to make humorous remarks about XRP being listed as a security permanently.

However, Schwartz counters that if XRP fits this definition of a utility token, then Bitcoin and Ethereum also fall within it.

"If XRP is a utility token [or security per IMF] because you can use it to pay future transaction fees, then so are Bitcoin and Ethereum," Schwartz stated.

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

It's worth noting that if one takes the IMF's definition of utility tokens literally, it could classify not only XRP but also other major assets like Ethereum and Solana as "debt securities."

Meanwhile, the Ripple CTO maintains that, to the best of his knowledge, no major token fully meets the IMF's criteria for a security in their definition of a utility token.

The latest debate over XRP's classification comes as Ripple prepares to conclude the legal battle in which the classification of XRP plays a central role.

In 2020, the U.S. Securities and Exchange Commission (SEC) charged the blockchain payments firm with violations of securities law concerning its sales of XRP.

In 2023, District Judge Analisa Torres ruled that Ripple's programmatic XRP sales did not constitute security offerings but held that Ripple's direct sales to institutional investors did.