Classifying XRP as a Financial Product Could Create Disadvantages for Its Core Tech: Legal Expert

Attorney Bill Morgan has weighed in on discussions surrounding the possible classification of cryptocurrencies such as $XRP and Bitcoin as financial products.

He believes such a move could create unintended consequences for the technology. His comments came in response to reports that Japan may move toward classifying Bitcoin as a financial product under its regulatory framework.

Morgan said the issue is not limited to Bitcoin but could extend to other major cryptocurrencies, including $XRP and Solana. According to him, placing these assets within a traditional securities regulatory framework could undermine some of their core technological strengths.

Key Points

• Attorney Bill Morgan warns that classifying $XRP as a financial product could undermine some of the asset’s core technological strengths.

• Morgan says strict financial product rules could limit $XRP’s efficiency as a fast, low-cost bridge currency.

• He notes that the definition of “financial product” varies globally, with Japan and Australia taking different regulatory approaches.

• Meanwhile, the SEC and CFTC have agreed to coordinate crypto oversight to reduce regulatory overlap in the U.S.

Concerns Over $XRP Utility

Morgan explained that if $XRP were integrated into a securities-like regulatory framework by being labeled a financial product, it could create disadvantages for some of its primary use cases.

$XRP is a fast and low-cost bridge currency for moving value across different financial systems. If strict financial product regulations were applied directly to the asset itself, Morgan suggested it could affect how efficiently the network functions.

He noted that such classification could reduce some of the flexibility that allows $XRP to operate as a rapid settlement tool.

Differences in Global Regulatory Approaches

Morgan also pointed out that the term “financial product” does not necessarily carry the same meaning across different jurisdictions. For example, the interpretation in Japan could differ from the way the concept applies within Australia’s regulatory framework.

He said it would be a negative outcome if cryptocurrencies like Bitcoin or $XRP were classified as financial products under Australian law.

However, Morgan added that such a scenario appears unlikely based on his understanding of current legislative developments in Australia.

Australia’s Crypto Legislation Targets Intermediaries

Morgan explained that the crypto legislation recently passed by the Australian Parliament, which is currently under review by a Senate committee, focuses primarily on regulating intermediaries rather than the crypto assets themselves.

The rules aim to determine when companies or service providers must obtain an Australian financial services license. The legislation does not seek to redefine cryptocurrencies like $XRP or Bitcoin as financial products.

Morgan recently discussed these regulatory developments during a presentation at the Wave of Innovation $XRP 2026conference held in Sydney.

SEC, CFTC Strike Pact to Coordinate Crypto Rules

Meanwhile, in the United States, efforts are underway to define crypto rules through the Clarity Act.

This week, the U.S. SEC and CFTC signed an agreement to coordinate how they regulate financial markets and digital assets. The deal aims to reduce years of overlap between the two regulators by aligning how they create rules, supervise firms, and enforce laws where their responsibilities intersect.

Under the Joint Harmonization Initiative, the agencies will work together to clarify how financial products are classified, update clearing and margin rules, simplify reporting requirements, and strengthen oversight of trading platforms. The effort also includes building a regulatory framework specifically for crypto assets and emerging technologies.

Officials say the goal is to create a more consistent and streamlined regulatory system. The move could reduce uncertainty about which regulator oversees digital assets and make it easier for companies to operate across crypto and traditional financial markets.