Heavyweight investors have scooped up incommensurable amounts of XRP as of late. Over just a day, whales have gathered more than 74MN tokens from a single crypto platform, clearing out the path for a possible optimistic Ripple price prediction to come to fruition. Amid the rising eagerness to discover how the SEC versus Ripple case rules out, investors are more confident than ever. We’ll quickly break down a few insightful essentials to help improve the knowledge of those unfamiliar with the legal spat between the Securities and Exchange Commission (SEC) and Ripple company. What some fail to tackle that is of paramount interest is how this dispute intersects with the currency these days and why some investors disclose a tendency to favor XRP over BTC and ETH when the bellwethers have performed quite well as of late.
Let’s cut through the noise and see if the judgments of those picking XRP over other cryptocurrencies when the capital is limited to a single crypto are well-founded and worth gaining inspiration from.
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The fight over the commodity endowment
The debate as to whether crypto is offered as a security instead of a commodity is as old as the hills. While they’re both traded on market exchanges, the former category is taxed more favorably compared to the latter. A commodity is a physical, basic goods like gold, silver, grain, and oil, often characterized by scarcity.
On the flip side, securities yield revenue from a company or enterprise, similar to how shares from a company trade on the NYSE and other stock markets. Examples extend to mutual ETFs, government bonds, debentures, and others, which are taxed more unflatteringly since their pricing can fluctuate considerably compared to commodities, which hold value over time. Examples of shares that fluctuated a lot over time are numerous; the list includes Tesla, General Motors, Nvidia, Amazon, AMD, Adobe, and more.
Given their activity and performance, securities are subject to harsher regulations since taxing concerns collectible capital gains. Ripple, the blockchain that creates XRP cryptos, has been accused since 2020 of providing investors with tokens as unregistered securities, leading to the ongoing legal conflict.
Blockchain and crypto developers can tap into massive capital amounts possessed by large institutional investors during such sales. Nevertheless, it’s now obligatory that any entity intending to raise funds this way register its offerings with the SEC. The costs and time spent during the process put off many fundraisers who try to skip this part by not registering their offerings, setting a precedent that the SEC fights against.
A quick recap of the SEC vs. Ripple legal clash
In 2020, the SEC suspected that Ripple sold unregistered securities in an offering to investors and grossed over $1.3BN in 2013. The faulted company riposted, supporting that the assets are not securities. Yet, the repercussions triggered are thought to have negatively impacted the crypto sector ever since.
Fast-forward to 2023, when the SEC stopped pursuing the case against two of Ripple’s executives, Christian Larsen and Brad Garlinghouse. The watchdog concluded that crypto is a security when offered to institutions, not the general public. In May 2024, the watchdog made its final statement emphasizing the remedies Ripple should contribute, asserting that the company made profits illegally and that its counterarguments failed to prove the contrary.
Not long ago, Ethereum was in a similar position. The SEC judged it a security, and after lengthy and thorough legal operations, the second-best crypto was finally labeled a commodity, proving that the previously harvested optimism didn’t pile up in vain.
The settlement’s possible impact
A few factors are sure to influence Ripple’s XRP price over the following weeks or possibly months, among which the lawsuit’s conclusion ranks the highest. A settlement to Ripple’s advantage may increase the token’s demand and thus facilitate its reattainment of $1.00. This would be a far cry from its ATH of more than $3.89 at the beginning of 2018, but some future partnerships between Ripple and major financial players could facilitate the climb. Ripple shook hands with a few prominent financial institutions, such as Morocco’s Attijariwafa Bank, Thailand’s Siam Commercial Bank (SCB), and Egypt’s Commercial International Bank (CIB). The potential triumph against the SEC could drive more collaborations and become a key factor to pay attention to down the road.
Classifying the stablecoin plan
Moreover, the blockchain company could delve into its planned stablecoin classification, as the regulatory agency suspects this project could be a historic recurrence and an attempt to sell unregistered assets. Stablecoins are, by default, developed to keep their prices stable, given their reliance on a major currency like the GBP or USD. If the SEC denies associations with securities, Ripple’s stablecoin triumph could turn favorable.
Another event people keep an eye on is the path that SEC Chairman Gary Gensler could take. The leader’s possible resignation could send shockwaves through the whole crypto market. Nevertheless, the conclusion will be drawn next year, meaning that investors must learn to be patient and remain updated with the news.
Could XRP-spot ETFs launch in the future?
A settlement between the SEC and Ripple could favor investment firms looking to explore the currency’s potential deeper. Such a milestone could pave the way for a new market in the U.S. that serves spot XRP ETFs. This could also facilitate XRP’s return to one dollar per token. Eleven years ago, the asset peaked at $0.93 after XRP’s ruling programmatic sales.
Words of caution
Investors are advised to keep an eye on the market and use common sense to avoid a possible FOMO trap. As the settlement’s conclusion approaches and the news depicts the asset in increasingly favorable nuances, investors may be tempted to splurge in hopes of grossing astronomical returns. No one can guarantee such a favorable result, so stay humble and attentive to your funds.
While Ripple has a bright future ahead, the crypto market volatility is a non-negotiable factor to watch in the upcoming weeks and months.
