Aaryamann Shrivastava
FXStreet
- XRP, along with another 24 tokens, is no longer greenlit as approved tokens eligible for exchange listing.
- The New York Department of Financial Services updated its virtual currency oversight regime, approving only eight crypto assets.
- XRP price has been inching closer to a key barrier at $$0.505, breaching which is necessary to initiate a recovery rally.
XRP price has been influenced by external conditions for quite some time now, going back to 2020. The token took its time to gain the status of being “greenlit”, but the New York regulatory body is aiming at changing that with its updated policy.
New York agency goes after XRP
The New York Department of Financial Services (NYDFS) recently updated its virtual currency oversight regime. In the update, the agency announced new criteria for exchanges to list crypto assets. At the same time, the NYDFS also removed 25 different assets from its “greenlist” of approved tokens. Among these 25 crypto assets are names like XRP, DOGE, LTC and more, while the likes of BTC, ETH and six more continue to remain approved.
Interestingly, USD Coin (USDC), the second biggest stablecoin in the world, issued by Circle has not been included in the “greenlist”. The stablecoin was not part of the original list either, raising questions as to why this decision has been stood upon so firmly.
A lack of approval from the agency suggests that the token has not been cleared to be listed on crypto exchanges and could draw scrutiny from the NYDFS. In the past, this has been an issue with XRP when the Securities and Exchange Commission (SEC) first filed its lawsuit against Ripple. In response, many exchanges delisted XRP, which was relisted following Ripple’s partial victory.
Another delisting might have a bit more of a bearish impact on the price, given the current market conditions.
XRP price could take the hit
If NYDFS’ update reflects in token delisting, XRP price could end up observing a decline, which could prove to be harmful to investors. As is, the broader market cues resulted in the altcoin losing its gains from mid-July.
Trading at $0.503, XRP price is presently close to breaching the barrier at $0.505, flipping which into a support floor would send it toward the 50-day Exponential Moving Average (EMA) at $0.XXX. Reclaiming this line as support would push the asset further towards recovery. The Relative Strength Index (RSI) is also above the neutral line at 50.0, suggesting bullishness is more likely to be sustained at the moment.
XRP/USD 1-day chart
Nevertheless, in the event that the breach fails or external factors impact the coin adversely, XRP price could decline to test the support at $0.480. Falling through it would result in further losses and also invalidate the bullish thesis.
SEC vs Ripple lawsuit FAQs
Is XRP a security?
It depends on the transaction, according to a court ruling released on July 14:
For institutional investors or over-the-counter sales, XRP is a security.
For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
How does the ruling affect Ripple in its legal battle against the SEC?
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token.
While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and will need to keep litigating over the around $729 million it received under written contracts.
What are the implications of the ruling for the overall crypto industry?
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at.
Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say.
Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales are likely to persist.
Is the SEC stance toward crypto assets likely to change after the ruling?
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation.
While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
Can the court ruling be overturned?
The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before then. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.
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