The lawsuit between Ripple Labs and the United States Securities and Exchange Commission has become a landmark case in the cryptocurrency industry, likely having a lasting impact on its future development.
For those unaware, the Commission alleged (back in late 2020) that Ripple had conducted an unregistered sale of securities when selling XRP to institutional investors. Moreover, it argued that programmatic sales of XRP on centralized exchanges to retail investors – massive allegations that caused a ripple (pun intended) effect throughout the industry.
XRP’s price cratered as almost all of the major cryptocurrency exchanges delisted it out of fear of prosecution.
The case has been ongoing for four years, but last week, US Judge Analisa Torres ruled in a way that dispersed many of the concerns. The court found that the programmatic sales of XRP to retail clients through centralized exchanges (the more important claim) did not violate securities laws. She also ruled that Ripple violated securities regulations through its direct sale of XRP to institutional clients.
This resulted in a fine of $125M – a far cry from what the SEC had demanded (close to $2 billion). The market soared once the news broke out, and XRP exploded by about 20%. The price has since stalled. However, the implications of this ruling are likely to have a long-lasting impact on the cryptocurrency. The following are three potential ways it could shape its future performance.
Alleviate Regulatory Pressure
The US SEC was seeking close to $2 billion from Ripple – an amount that could have caused irreparable damage to the company if granted.
Not only this but if the court had declared XRP sold to retail customers to be a security, that would undoubtedly cast a massive shadow over the cryptocurrency and push it into a regulatory regimen far different from the current.
This was clear in the reaction of multiple major crypto exchanges, which delisted XRP from their platforms almost immediately once the SEC filed its charges in 2020.
Now that the court has spoken, investors can rest more assured that they are not dealing with a security instrument.
XRP Returning to Exchanges
The same is true for cryptocurrency exchanges – the main medium for the trade of XRP. These platforms are no longer threatened to offer securities for trading to their retail customers without the necessary compliance mechanisms.
But crypto exchanges aside, some popular tradfi venues like Robinhood are already rumored to be considering listing XRP.
: Hold onto your digital wallets, folks! Rumor has it that #XRP might be making its grand entrance on Robinhood’s stage by early 2025, thanks to their upcoming acquisition of Bitstamp. If true, this could be the blockbuster event that introduces XRP to millions of new investors… pic.twitter.com/hIMfp1QZBX
— Brett Hill (@Brett_Crypto_X) August 10, 2024
Legacy Institutions Getting Involved
This might be a bit of a long shot, but the article is focused on long-term implications for XRP’s price anyways. Now that the court has clarified its stance on the matter, legacy institutions such as BlackRock might consider (at some point) creating and offering an XRP ETF for approval to the Commission.
After all, XRP remains one of the largest cryptocurrencies, despite the legal hurdles of the past four years, and generates substantial trading volume.
A product of the kind might make sense for its issuers because XRP has one of the largest communities and a substantial base of retail investors.
