By
Chimamanda U. Martha
April 26th, 2024
According to Schwartz, obtaining XRP from Ripple could have tax consequences. He emphasized individuals might have to sell their XRP shares to pay their taxes.
David Schwartz, the Chief Technology Officer (CTO) of Ripple Labs, recently addressed the XRP community on X (formerly Twitter) about the selling of XRP and its involvement in Automated Market Maker (AMM) pools. His comments come at a time when numerous individuals are worried about selling XRP and what it entails. Dev Null Productions left the XRP ecosystem because they didn’t trust Ripple’s leadership, which led to their interaction.
It's nearly impossible to avoid selling if you want to hold.https://t.co/1hILC94kb1
— David "JoelKatz" Schwartz (@JoelKatz) March 26, 2024
Ripple CTO on the Tax Challenges of Holding XRP
Ripple CTO talked about the problems investors face when they hold XRP, especially when it comes to taxes. He said it is “nearly impossible” not to sell XRP, especially when it comes to settling taxes on XRP that one has received.
Schwartz had stated in the past that anyone who owned a digital asset, such as XRP, could sell it whenever they wanted. But in the recent comments, he’s talked more about the potential issues that could come up when trying to sell XRP.
According to Schwartz, obtaining XRP from Ripple could have tax consequences. He emphasized individuals might have to sell their XRP shares to pay their taxes. One example is that if Schwartz got a bonus of 1,000,000 XRP from Ripple, he would probably have to sell a lot of it to pay his taxes.
Schwartz highlighted that the individuals who own XRP are liable for a great deal of taxes, especially in California, where the top tax rate for earned income can be as high as 50%. This observation has led to heated arguments among XRP holders and crypto traders. It has shed light on the confusing tax issues and practical obstacles that come with selling digital assets.
The discussions have started a new conversation in the cryptocurrency community, which has led to a closer look at the tax effects and financial planning strategies for consumers who own digital assets.
Community Discontent and Departure of Dev Null Productions
Dev Null Productions has been an important part of the XRP ecosystem for a long time, and their decision to leave has caused a lot of debate in the community. They decided to leave because they were unhappy with Ripple’s leadership. The organization said that they prioritized selling XRP over the interests of small investors. They additionally expressed their discontent with the XRPL Foundation, arguing that personal goals were more important than community values.
In light of this, projects like Ledger City will be shut down, and the domains that go with them will be allowed to end. Dev Null Productions told the community to stand up to what they see as “corrupt” leadership in Ripple Labs and the XRPLF.
Insights on Using XRP in AMM Pools
Schwartz further discussed the idea of using XRP in Automated Market Maker (AMM) pools, which are commonly used in decentralized finance (DeFi).
In response to a user on X, he said that adding XRP to an AMM pool would mean matching it with another asset, which would mean selling half of the XRP. According to him, such transactions might be considered taxable events for Ripple.
On Wednesday, the price of XRP held steady at $0.62. The altcoin didn’t move much given that it was experiencing a hard time breaking through major resistance levels.