The post Attorney Explains Why XRP Token Buybacks Are Not the Same as Share Buybacks appeared first on Coinpedia Fintech News
Ripple recently bought back about $750 million worth of its own shares, valuing the company at around $50 billion. This move has sparked questions in the crypto community about whether Ripple should also be supporting XRP more directly. Attorney Bill Morgan and Zach Rynes share opposing views on how token value should be supported.
Why Ripple Isn’t Buying XRP
Morgan rejected comparisons between token buybacks and traditional stock buybacks. According to Morgan, the comparison is flawed because cryptocurrency tokens do not function like company shares.
Shares provide ownership rights and claims on company profits, while XRP operates on the decentralized XRP Ledger, which Ripple does not control. Morgan emphasized that Ripple does not own the network, meaning actions like buybacks would not have the same economic meaning they do in traditional corporate finance.
Instead of accumulating more tokens, Morgan suggested that Ripple could potentially release escrowed XRP faster to improve liquidity within the ecosystem.
Evernorth Strategy: Ripple’s Alternative Approach
Morgan also pointed to another approach linked to Ripple through Evernorth, an entity created to build an institutional XRP treasury.
Evernorth plans to buy XRP, use it in yield strategies like lending or liquidity, and then use the earnings to purchase more XRP from the market. This could slowly increase demand for the token. Morgan added that Evernorth operates independently and aims to give institutions a regulated way to gain exposure to XRP.
Critics Push Back on Ripple’s Strategy
However, not everyone agrees with Ripple’s approach. Zach Rynes, also known as ChainLinkGod, criticized Ripple’s structure, arguing that companies issuing both tokens and equity could create conflicting incentives.
Rynes claimed that when a company sells tokens while also prioritizing equity shareholders, the economic interests of token holders and shareholders may not always align. He also argued that using revenue to support token value, similar to corporate buybacks, could provide clearer benefits to holders.
Another voice in the discussion, SmartCon Drummer, questioned why Ripple focused on buying back company shares rather than purchasing XRP directly from the market. According to him, token buybacks could create both direct price impact and positive psychological sentiment among holders.
Ripple’s Narrative
Rejecting such claims, David Schwartz, former Ripple CTO argued that if critics believe Ripple lowers XRP’s price by selling tokens to fund share buybacks, the same logic means XRP holders actually benefit by getting the chance to buy the token at lower prices.
Are you being deliberately dumb? It’s good for holders because it made the price of XRP go down when they bought it.
Narratives Changing to Legal Concerns
Ripple supporters argue that the company’s strategy is partly shaped by legal history. During the long-running SEC v. Ripple case, the U.S. Securities and Exchange Commission cited actions by Ripple that allegedly supported XRP’s price as part of its argument that the token could be considered a security.
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FAQs
Ripple says XRP isn’t a company share. Because it doesn’t control the XRP Ledger, token buybacks wouldn’t work like stock buybacks used by traditional companies.
Large market purchases could boost demand and sentiment. However, Ripple has avoided this strategy due to regulatory concerns and token-equity differences.
Ripple has been cautious. During the SEC case, actions tied to supporting XRP’s price were cited in arguments that the token might be a security.
