Bitcoin Magazine
Bitcoin Is A Strategic Asset, Not XRP
A recent submission to the U.S. Securities and Exchange Commission’s (SEC) newly constituted Crypto Task Force was presented by Maximilian Staudinger, advocating for XRP to be recognized as a “strategic financial asset” within the U.S. market, albeit utilizing some questionable calculations and reasoning.
This analysis aims to clarify that XRP should not be considered a strategic asset and that the claims made in Staudinger’s proposal are fundamentally flawed.
In his argument, Staudinger mentions that $5 trillion is currently held in U.S. Nostro accounts, which are maintained by banks for international transactions. He posits that with specific regulatory frameworks in place—such as the SEC recognizing XRP as a payment network, the U.S. Department of Justice (DoJ) sanctioning its use by banks, and the Federal Reserve dictating XRP’s role as a liquidity tool—then 30% of this capital ($1.5 trillion) could be allocated for the U.S. government to acquire 25 million bitcoins, each priced at $60,000.
Let’s dissect why this logic is fundamentally unsound.
Primarily, Nostro accounts are merely bank accounts that U.S. financial institutions maintain overseas. It’s unclear how the banks could transition U.S. dollars—which XRP would ostensibly take over—into the hands of the Federal government, allowing those funds to then be utilized for purchasing bitcoin for government reserves.
Secondly, the proposal does not clarify how these domestic banks would actually accumulate the XRP that would offset the dollars. It is reasonable to infer that they would need to acquire the XRP on the market, leading to XRP consuming that $1.5 trillion rather than bitcoin. Even assuming Ripple, the entity behind XRP, sought to distribute its holdings to these banks, it would remain insufficient—it holds roughly $100 billion in XRP, well below the proposed $1.5 trillion threshold.
Thirdly, even if bitcoin’s value were to decrease to $60,000, the price would likely rebound rapidly as the U.S. government commenced the purchase of 25 million bitcoins.
Finally, there is a definitive maximum supply of only 21 million bitcoins (and approximately 4 million coins are believed to be lost), which is widely acknowledged within the Bitcoin and cryptocurrency community. Hence, it is utterly unrealistic to suggest that the U.S. government could procure 25 million bitcoins. If the proposal held any merit, it would have been more prudent for the author to propose the acquisition of around 15 million bitcoins at $100,000 each, despite still falling short in arithmetic.
Considering the multitude of logical inconsistencies within this submission, it is challenging to view XRP as a strategic asset. Additionally, the rationale behind the U.S. government’s endorsement of such an asset is questionable, especially since two-thirds of XRP’s supply is still controlled by the entity that issued it.
Conversely, Bitcoin stands as a worldwide asset, utilized by numerous individuals globally as a medium of exchange and a reliable store of value. Moreover, the Bitcoin network is bolstered by thousands of nodes that ensure its security and resilience, protected by roughly 0.4% of the world’s energy. In stark contrast, the XRP network operates with only 828 nodes and lacks a solid energy foundation for its protection. These aspects position bitcoin as a logical candidate for being a reserve asset, which the U.S. government has recently officially recognized.
In conclusion, it is hoped that the SEC comprehends the points articulated in this discussion and refrains from dedicating time to Mr. Staudinger’s assertions.
This article is a Take. The opinions presented here belong solely to the author and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
This article originally appeared on Bitcoin Magazine and was authored by Frank Corva.
