XRP update: To buy or not to buy XRPLedger’s native token after SEC vs Ripple ruling
- XRP token’s market capitalization doubled to nearly $40 billion after the SEC vs Ripple ruling by Judge Analisa Torres.
- Exchanges are rushing to re-list the token, and automated market makers are developing projects for the XRP blockchain.
- Ripple claims to be in talks with 20 countries for CBDC plans, however experts believe XRP is less likely to see mass adoption in the short term.
The SEC vs Ripple ruling triggered a massive recovery in XRP market capitalization and price. The altcoin’s market cap is nearly $40 billion at the time of writing and the token is trading at $0.7394.
Experts at Bankless, an investing podcast evaluated whether it is a profitable trade to buy XRP as institutional investors ape into the altcoin after the recent court ruling.
FXStreet has extensively covered XRP and the SEC vs Ripple lawsuit:
- XRP ruling puts cryptocurrencies in nuanced position, industry experts weigh in
- Coinbase-SEC lawsuit unrelated to XRP non-security ruling, executives drop COIN stock like hot cakes
- Breaking: Ripple records landmark win against the SEC as court rules XRP is not a security except...
Pros of buying XRP
Experts at the Bankless podcast noted that following Judge Analisa Torres’ decisive judgment – that XRP is not a security (except when sold to institutionals) – the altcoin’s market capitalization soared. XRP market capitalization nearly doubled and is $39.95 billion, nearly $40 billion at the time of writing.
Centralized crypto exchanges, including Coinbase, Gemini, Kraken, and Bitstamp, rushed to relist XRP trading pairs. DeFi protocols announced proposals to list the altcoin on their platforms and developers started working on projects to bring smart contracts and automated market makers to the XRP blockchain.
These developments have fueled a bullish thesis for XRP holders.
Currently, the XRP blockchain does not support smart contracts like Ethereum and Solana, however XRPLedger developers have announced a smart contract-like functionality called “hooks.” The introduction of hooks could aid developers in building smart contracts on the XRP blockchain, pushing its utility and adoption higher and fueling a long term price rally.
The Hooks Amendment has passed its comprehensive security audit by @goFYEO, marking a significant milestone in our journey towards integrating Hooks into #XRPL.
— XRPL Labs (@XRPLLabs) June 5, 2023
Read about Hooks passing the audit here: https://t.co/BxfcINMG3l
Cons of buying XRP
One of the key drawbacks of buying XRP tokens is the lack of bullish catalysts in the altcoin’s ecosystem. XRP blockchain lacks programmability, and this has made it difficult for the chain to attract developers and users in the past and there is limited remedy for this shortcoming, beyond sidechains.
Ripple Labs currently claims to be in talks with 20 countries for development of their Central Bank Digital Currency (CBDC) projects. However XRP’s role in this project is unclear and undetermined.
It is unlikely, therefore, that the XRP blockchain will see widespread adoption among projects and protocols in crypto. The XRP holder community has long awaited SWIFT’s replacement, however the long-heralded use case is yet to come to fruition.
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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Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
