The crypto market is in the green, the community is elated, and XRP is going parabolic. The arduous legal battle of Ripple with the US Securities and Exchange Commission might be finally over. Or is it not that simple? Let’s unpack the latest XRP news to understand what happened and evaluate the impact on the crypto market.
Breaking News: Judge Rules XRP is Not a Security
This Thursday, the U.S. District Court of the Southern District of New York judge Annalisa Torres ruled that the sale of the XRP token does not constitute a security in certain cases:
- Programmatic sales of XRP through exchanges and algorithms;
- Payment for services;
- Sales of XRP by ex-CEO Christian Larsen and current CEO Brad Garlinghouse in individual capacities.
The judge denied Ripple’s motion to deem sales of XRP to institutional investors as not security contracts. In other words, she agreed with the U.S. Securities and Exchange Commission that in this case, a sale of XRP constitutes an investment contract.
Even though it is partial, this is still a victory for Ripple and XRP. Granted it is a federal court decision in one constituency, there is now a legal precedent that better defines the status of XRP in the US.
What does it mean for XRP and crypto?
Previously, we have made a guide to explain why the legal definition of an asset matters. In short, a legal status defines permitted use cases and guidelines to follow. Should XRP have been deemed a security, Ripple as a key contributor would need to apply measures to protect investors (such as KYC).
With this legal precedent, it became clear that these measures should be applied only to institutional investors. Retail customers and XRP holders can legally remain pseudonymous and they, together with exchanges, will not be required to follow extra laws.
This is not the first time that a legal precedent changed the legal landscape for digital assets like crypto. In 2018, when the SEC committee Director Bill Hinman stated that BTC and ETH are not securities, Larsen took it to be the stance that applied to all crypto assets. With the change in the SEC policies in 2020, when the SEC v. Ripple case started, more coins and tokens started to be viewed as alleged unregistered securities.
The case is a big deal for Ripple because it is a U.S.-based company and a considerable portion of their clients reside there. They did use the fact that XRP is not considered to be a security in Japan, the UK, and the UAE as a defense in court. Now, US investors and companies have a better idea of how transactions with digital assets should be handled.
The case is not over just yet: the SEC can file an appeal and Ripple’s sales to institutional investors still violated the securities laws, according to the ruling. Another American crypto giant, Coinbase, is in a similar situation, awaiting the development of their own case.
Timeline of the SEC v. Ripple Case
The saga goes all the way back to December 2020: as a high-profile case, it is extremely well documented in the crypto media. First reports of upcoming legal action surfaced in December 2020, although Garlinghouse was on record discussing the scenario a month prior.
The case lasted through both the bull run of 2021 and the crypto winter of 2022. Major price movements were more likely to be influenced by the news surrounding the case than by the market trends, although there is a clear correlation.
There are a few things to take away from the full timeline from December 2020 to today. At first, the price swings that followed each update to the legal battle tended to move XRP stronger than later. The lawsuit confirmation and the delisting tanked the price, and the first victories against the government agency made the price skyrocket. This is not the case by the end of 2022 when the XRP price would react very weakly to any news in comparison. Another trend that gets more apparent as the timeline goes on is the confidence of Ripple and fewer wins on the SEC’s side. A key development in the legal battle was the discovery of the previous Chair of the SEC, William Hinman’s speech and emails. Ripple fought the SEC over the statements so they could use them in their defense, and the judge ruled the motions in their favor.
All in all, even with the abundance of updates and developments to the SEC v. Ripple case, it dragged on for two and a half years. It bears repeating that it is not over but Ripple has just received its long-awaited answer regarding XRP and scored the biggest victory to date.
XRP Price Analysis
As soon as the ruling became public knowledge, the price of XRP jumped by 70%. Up from $0.4778, it quickly climbed to $0.8875, and the current price of XRP at the time of writing is $0.7891 (per CoinMarketCap).
Since the Ripple case is hailed as a win for the crypto industry as a whole, the news positively impacted global metrics. The total crypto market capitalization is up 4.78% and trading volumes increased by 131.50% in comparison to yesterday.
The ChangeHero team thinks this news brought a much-needed bullish impulse to plenty of altcoins, and we are not alone in that. For instance, Captain Altcoin wrote that Cardano (ADA) is in an even better position than XRP both from a trading standpoint and for fundamental reasons. Obviously, XRP is the best performer among the top 100 at the moment, followed by Stellar (XLM) (a fork of XRP) and Solana (SOL).
Investors with diversified crypto portfolios are in the best position to benefit in these circumstances. A piece of advice: unless you have experience as a trader, try not to give in to the FOMO and take profits if necessary.
Even though the SEC v. Ripple case is not closed, the U.S. crypto industry finally has more long-awaited clarity in regulation. The gains that spilled from XRP to other altcoins might trigger bullish price action in some of them, so keep your eyes peeled.
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