A debate over the business model of XRP Ledger (XRPL) erupted after Ripple’s chief technology officer (CTO), David Schwartzdirectly addressed taxation issues on the blockchain. Critics have suggested that if XRP holders aren’t making money from the ecosystem, someone needs to collect a tax. Schwartz’s response challenges this assumption, presenting the XRP Ledger as a public service rather than a profit-generating mechanism for token holders. The debate has since sparked broader conversations about real use casespassive income expectations and the underlying purpose of the XRPL blockchain.
Ripple CTO Says There Is No Tax on XRP Ledger
In an article on social media clarified that the XRP Ledger does not impose taxes on its users. He explained that the ledger allows holders to issue assets, trade, create NFTsand make payments without the central authority deriving value from these financial activities. He also stated that transaction fees and reserves exist only as anti-spam measures, not as a wealth extraction mechanism.
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Ripple’s CTO emphasized that ownership of XRP does not give anyone the right to collect fees or profits from the ledger itself. He made a comparison with The Bitcoin blockchainhighlighting that XRPL provides similar decentralized functionality while also supporting features such as Decentralized Exchanges (DEX)stablecoins and NFTs. These features work without the need for XRP holders to take advantage of system operations.
Schwartz’s remarks on taxes on the XRPL blockchain come after Matthew SigelHead of Digital Asset Research at VanEck, raised questions about who benefits if XRP holders gain nothing from the ecosystem and the protocol itself does not generate value. In response, other community members, including UNL’s veterinary XRPL validator, underlines that the lack of tax encourages developers and users to focus on creating meaningful and functional use cases rather than relying on passive income.
XRP’s usefulness trumps tax considerations
The XRPL tax debate between Schwartz and Sigel also intersected with discussions about real-world applications of blockchain. In a much older article, Sigel questions the relevance of blockchainsubtly hinting that its supporters overestimate its functionality.
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In response, a member of the XRP community pointed the recent collaboration between Ondo Finance, Ripple and BlackRock, in which the XRP Ledger will be used for the issuance of stablecoins, minting, redemption of Treasury assets and improving liquidity in financial markets. While Sigel recognized the innovative initiative, he reiterated that these applications do not directly generate income for XRP token holders, highlighting a gap between network activity and personal gain.
Schwartz replied explaining that the value of XRPL stems from financial independence and reducing the reliance on intermediaries, rather than providing passive income. He added that focusing on tax collection as a measure of success can overshadow blockchain’s goal of promoting open access and meaningful innovation.
Featured image from Peakpx, chart from Tradingview.com
