Following a long and intense legal battle with the U.S. Securities and Exchange Commission (SEC), demand for the XRP cryptocurrency in the U.S. has once again reached pre-case levels. The trial, which began in December 2020, has brought XRP to a number of issues, including delisting from major cryptocurrency exchanges, which has significantly impacted its availability and value on the market.
Yesterday, one of the most important trials in the history of the cryptocurrency market ended, bringing Ripple Labs a partial victory and opening a new chapter in the history of the project.
History and current legal situation
In December 2020, the U.S. Securities and Exchange Commission (SEC) accused Ripple Labs of conducting an unregistered securities offering by selling XRP. The SEC alleged that Ripple and its two top officials raised over $1.3 billion through an unregistered securities offering, selling the cryptocurrency to investors around the world. The news caused a huge stir in the cryptocurrency market, leading to a mass delisting of the token from many U.S. exchanges, such as Coinbase, Kraken, and Bitstamp.
The withdrawal had a drastic effect, reducing the availability of the cryptocurrency and causing a drop in investor interest. In the months following the announcement of the lawsuit, the price of XRP fell by more than 60% and trading volumes dropped significantly.
After three years of intense legal battle, the court ruled that the sale of XRP on exchanges did not constitute a securities transaction. This ruling was of great importance for the cryptocurrency market, as it confirmed that transactions on exchanges could continue without having to meet the SEC’s stringent securities requirements. However, the court noted that direct sales to institutional investors must be treated differently and are subject to securities regulations.
Why is demand growing?
Demand for XRP has surged recently for a few key reasons. First and foremost, the re-listing of XRP on major cryptocurrency exchanges has opened up access to the token to a broad group of American investors.
Additionally, the positive court ruling has created an atmosphere of legal certainty around XRP, which is crucial for investors who were concerned about potential regulatory consequences. The ruling ruled that XRP transactions on exchanges are not securities transactions, eliminating many of the uncertainties and risks associated with investing in the token. Investors now feel more confident about the future of XRP, which is driving further growth in demand.
One of the key factors supporting further growth in demand is also the growing adoption of Ripple technology by financial institutions for international money transfers. RippleNet technology and the use of XRP as a currency bridge can significantly reduce the costs and time of transfers.
XRP Usability
XRP stands out from other cryptocurrencies for its specific utility in the financial ecosystem, especially in the field of international money transfers. RippleNet technology, which uses XRP as a currency bridge, allows for fast and cheap transfers of funds between different currencies. This allows banks and financial institutions to complete transactions in a matter of seconds, instead of days, as is the case with traditional banking systems. The costs of such transactions are also much lower, which makes RippleNet an attractive solution for the financial sector.
Additionally, XRP is used to provide real-time liquidity, eliminating the need for pre-funded nostro and vostro accounts. This significantly simplifies financial processes and reduces currency risk, which is beneficial for large institutions operating in multiple international markets. XRP Ledger (XRPL) technology also enables the creation and management of smart contracts and tokens, which further increases its versatility and potential applications in various sectors of the economy.
The development of features such as the XRP Ledger Ethereum Virtual Machine (EVM) sidechain, which enables interoperability with Ethereum, and the introduction of new tokenization standards such as the Multi-Purpose Token (MPT) indicate further potential for XRP growth and adoption. With these innovations, XRP can be used in an even wider range of applications, from finance to gaming and other industries using blockchain technology.
Investment Analysis and Prospects
Despite the current surge in demand for XRP, it’s worth emphasizing that the cryptocurrency market is not currently in an “altseason,” a period of rapid price increases for altcoins. Altseason is characterized by broad increases in the value of most altcoins, often fueled by speculation and increased retail investor activity.
Investors should be cautious, as XRP, despite its promising prospects, is still exposed to high volatility and regulatory risks. High price volatility is characteristic of the cryptocurrency market, where even small events can lead to large value fluctuations. We are currently in a bull market, where most investors are interested in BTC, and it still seems to be the safest place to invest capital.
However, given the positive outcome of the court case and renewed market confidence, XRP could be an attractive investment option in the medium term. The positive court ruling that XRP transactions on exchanges are not securities transactions has increased legal certainty and reduced regulatory risk associated with investing in the project. This, combined with the re-listing of XRP on major cryptocurrency exchanges, could attract new investors and increase demand for the token. Additionally, the aforementioned growing adoption of Ripple technology by financial institutions could support long-term appreciation in value.
Final Thought
In conclusion, despite the risks associated with investing in XRP, positive legal developments and the growing adoption of Ripple technology may make this token an attractive medium-term investment option. As an investor, however, you should monitor legal and market developments and be prepared for potential price fluctuations.
