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Ripple Chief Technology Officer David Schwartz has criticized suggestions that XRP is a security according to the IMF’s definition of a utility token.
Last week, the International Monetary Fund (IMF) released the first update to its Balance of Payments and International Investment Manual since 2009, with the framework now including cryptocurrencies.
While this update highlights the growing recognition of cryptocurrencies, the IMF’s classification of these assets has sparked debates. One such debate regarding XRP prompted a response from Ripple’s CTO, David Schwartz.
Ripple CTO Reacts to IMF’s Classification of Utility Tokens Like XRP
Schwartz has rejected suggestions that XRP qualifies as a security based on the IMF’s definition of a utility token.
For context, the IMF’s new Balance of Payment Manual, BPM7, classifies crypto-assets according to whether or not 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—often referring to altcoins—do.
It asserts that these assets are “debt securities” that offer holders future access to goods and services. This has led some to comment humorously, “XRP is about to be 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 asserted.
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
Notably, if the IMF’s definition of utility tokens is taken literally, it could classify not only XRP but also other major assets like Ethereum and Solana as “debt securities.”
Meanwhile, Ripple’s CTO stressed that he is not aware of any major token that fits the IMF’s security definition of a utility token.
The latest debate over XRP’s classification comes as Ripple prepares to wrap up the legal battle in which the classification of XRP plays a central role.
In 2020, the U.S. Securities and Exchange Commission charged the blockchain payments firm with securities law violations over its sales of XRP. In 2023, District Judge Analisa Torres ruled that Ripple’s programmatic XRP sales did not constitute security offerings but faulted Ripple’s direct sales to institutional investors.