The ripple effect is a term used to describe an initial impact or disturbance to something that then spreads onwards to others around it. Though typically used in reference to scientific occurrences, it appears that Ripple Labs (CCC:XRP) may be experiencing its own sort of “Ripple effect” as the value of its XRP cryptocurrency has soared in recent days, following positive developments in the Securities and Exchange Commission’s case against the company.
Ripple vs the SEC: who is going to win?
Ripple has been battling the SEC since December, when the regulator filed a case against the digital payment provider classifying its XRP token as an unregistered security — a move made just days before Joe Biden’s inauguration as the 46th President of the United States and a changing of a guard at the SEC.
The case initially hurt XRP’s value and led to the suspension of its trading on multiple U.S.-based cryptocurrency exchanges, such as Coinbase. But Ripple’s top executives, two of whom were named as co-defendants in the suit, have fervently fought back against the regulator’s claims —backed by support from 11,000 XRP holders who banded together and filed a formal motion to intervene in the suit as a third party. And their efforts seem to be paying off.
In late March, U.S. Magistrate Judge Sarah Netburn voiced her opinion in court that she disagrees with the SEC’s assertion that XRP is a security, stating that she believes XRP has value as both a utility and a currency that differentiates it from other cryptocurrencies such as Bitcoin. Then, in early April the same judge granted Ripple the right to access internal SEC communications regarding how it determines if a cryptocurrency is a security, which she followed up last week by denying the SEC’s request for up to eight years’ worth of personal financial information for Ripple’s co-founder and executive chairman, Chris Larsen, and its chief executive officer, Brad Garlinghouse.
Meanwhile, in early April federal Judge Analisa Torres walked back her initial rejection of XRP holders’ motion to intervene by granting them the right to submit their motion to intervene by April 19th. And on top of all this, Ripple has filed for the SEC’s case to be dismissed, arguing that the regulator has no authority over XRP transactions that occur on foreign exchanges.
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Cryptocurrency trading market is watching spellbound
The broader cryptocurrency and investment communities are watching these legal proceedings closely and the gains Ripple seems to be making on this front are reflected in XRP’s value. XRP’s price reached its three-year high of $1.96 on Wednesday, bolstered both by the progress the company seems to have made in fending off the SEC thus far, as well as investors’ bullish sentiment about cryptocurrencies in the wake of crypto exchange Coinbase’s IPO on Wednesday.
While that is still a far cry from the $3.30 peak XRP reached in January 2018, it marks a seismic rebound from the week after the SEC’s suit was filed when XRP’s price plummeted as low as $0.173.
“XRP has a future in global business, just like Bitcoin and Ethereum. We can expect to see it become more and more mainstream as financial institutions and large organizations begin to purchase it,” said Nishank Khanna, the chief financial officer of fintech lender Clarify Capital. “With many companies adopting crypto as a form of payment, XRP has the potential to be used in transactions regularly. The issue beyond buy-in and widespread adoption will, of course, be how the government chooses to regulate it and other forms of decentralized financial assets.”
While industry experts on the whole seem optimistic regarding XRP’s future, and long-term price predictions range from around $3.50 to $5.60, investors should brace for ongoing turbulence in its value until there is some solid clarity regarding how the issue of SEC regulation will ultimately play out.