Investor and podcast host Jason Calacanis has reignited debate over XRP’s classification, calling the token a “centrally controlled security” in a recent post on X.

Calacanis questioned whether XRP should be considered decentralized, stating that if the Securities and Exchange Commission (SEC) allows it to trade like Bitcoin, then securities law will be worthless.

Calacanis Warns of Market Chaos

In his post, the podcast host warned that treating XRP like Bitcoin could create instability, allowing startups and investment funds to dump large amounts of tokens onto retail investors.

“There will be chaos in the markets as a million startups, funds and grifters start dumping 50% of their coins on retail while slowly selling the 50% they own and control.”

He further argued that such instability would harm the U.S., a country known for its structured and investor-friendly markets. To prevent this, he suggested restricting XRP trading to individuals who pass a “sophisticated investor test,” ensuring they understand the risks before investing.

Another user argued that Trump prioritizes opportunities for large investors over protecting retail investors, citing his approach to the CFPB and similar regulatory agencies.

Calacanis’ remarks have gotten criticism, particularly from John Deaton, founder of Crypto Law. Deaton responded by sharing a document that argues XRP does not meet the legal definition of an investment contract under the Howey Test.

According to him, the token is not a “contract, transaction, or scheme,” which directly opposes the investor’s argument.

Regulatory Uncertainty and Implications

The debate comes amid ongoing regulatory uncertainty surrounding XRP. In August 2023, Ripple secured a victory when a U.S. court ruled that the token is not a security when traded on secondary markets. However, the SEC later appealed the ruling, maintaining that the company violated securities laws in its sales to retail investors.

The outcome of the lawsuit and potential regulatory changes under the Trump administration could significantly impact XRP’s status. Bloomberg ETF analyst James Seyffart has pointed out that Commissioner Hester Peirce’s Crypto Task Force may reassess its classification by the end of 2025.

Attorney Jeremy Hogan has also weighed in with the same sentiment adding that an XRP exchange-traded fund (ETF) is unlikely to be approved until the regulator’s lawsuit is resolved.

There has also been speculation about the coin’s potential inclusion in a U.S. national crypto reserve.

Rumors began circulating after Trump met with Ripple CEO Brad Garlinghouse and Chief Legal Officer Stuart Alderoty for dinner on January 6. However, the case’s result will likely determine whether XRP could be considered for such a role.