Ripple is on a course to make waves in the world of international remittance payments. Unlike other cryptocurrencies, however, Ripple and its XRP token are owned and operated by a central, for-profit company.

The company’s strategic alliances are also not like those forged by blockchain projects serving the individual. Ripple is looking to do it by partnering with big central banks and large-scale payment providers. Some of their partners include Western Union, Money Gram, The Bank of Thailand and The Bank of Indonesia, just to name a few.

The company possesses a solid technical approach and a sound business strategy. Those two things are key reasons why founder Chris Larsen currently stands as the richest person in the industry. He’s worth an estimated $7 billion according to Forbes.com.

Despite the project’s success, many purists in the crypto community wish peril upon Ripple and its accompanying blockchain platform. The sour sentiment makes sense given the project’s main focus on saving central banks and other large institutions billions of dollars in remittance costs. This model ultimately yield’s banks more money rather than democratizing wealth and empowering the individual.

Regardless which side of the fence investors are on, the United States Securities Exchange Commission is breathing down Ripple’s neck. The regulator is questioning whether or not the launch of the project and its token represents the distribution of an unregistered security.

Of course this isn’t the first time the SEC and legal teams have gotten involved in the space. Schemes like Bitconnect, USI-Tech and Davor Coin are either already shut down or about to be. And Tezos, a decentralized ‘self-amending’ ledger, is still battling several lawsuits a year after launching their initial coin offering and raising $232 million.

How Are U.S. Regulators Scrutinizing Ripple?

The SEC uses what is known as The Howey Test to determine whether or not a  public offering of an asset should be classified as a security. The Howey Tests poses the following question: is the investor in the offering profiting solely from the work of another individual or third party? If the answer to the question is yes, then the offering is a security.

While the issue being debated is pretty simple when discussed in layman’s terms, things get sticky once senate meetings, lawyers and large amounts of money are at stake.

As of right now, Ripple’s standing is in question as leaders of the United States Senate Committee on Banking, Housing and Urban Affairs continue the debate.

While a Senate Committee meeting does not immediately mean Ripple is doomed, investors are letting their concerns be felt. The price of the XRP token has declined from 90 cents to around 78 in just the last seven days.

A Potential Snowball Effect In The Making

Legal expert Richard Levin believes Ripple isn’t the only digital currency that may be in trouble. He expects a lot more heat to be placed on projects by regulators. “I believe we will see an increasing number of enforcement actions by the SEC against the issuers of tokens and firms and persons that are not registered as broker-dealers that facilitated those offerings and received tokens as compensation for their work.”

At the present moment, nobody knows what the fallout of these Senate meetings, warnings and courtroom battles will do to Ripple or the cryptocurrency industry as a whole. Questions remain as to whether investors will want to support a project aimed at making central banks wealthier, or those empowering the individual to control their own money. For Ripple, it’s going to be an uphill battle to please the SEC and make the grade.

Jack Choros is a freelance journalist with Blockchain Business News Network