In a stunning turn of events, the price of XRP, the cryptocurrency associated with Ripple Labs, has nearly doubled this week, surpassing the psychologically significant $1 mark for the first time in years. The surge comes as the U.S. Securities and Exchange Commission (SEC) faces mounting legal challenges and the prospect of a more crypto-friendly regulatory environment under the incoming administration of President-elect Donald Trump.
SEC’s Legal Woes Fuel XRP’s Ascent
The SEC’s legal troubles took center stage on Thursday when a group of state attorneys general and the DeFi Education Fund filed a lawsuit against the agency, arguing that it has overstepped its constitutional authority in taking coercive actions against digital asset exchanges. The lawsuit, filed in the U.S. District Court for the Eastern District of Kentucky, contends that the SEC has unilaterally asserted regulatory authority over cryptocurrencies by classifying them as investment contracts akin to stocks and bonds. It further argues that digital assets are simply property, not investment contracts, and that the SEC’s approach violates states’ rights to independently oversee the sector.
This legal challenge could have far-reaching implications, particularly for the SEC’s pending appeal in the Ripple case, which has been a major factor influencing XRP’s price. In December 2020, the SEC sued Ripple Labs, alleging that the company had conducted an unregistered securities offering by selling XRP, which the SEC classified as a security. While a U.S. court ruled last July that Ripple’s XRP sales to institutional investors qualified as securities transactions, it also found that XRP sales on public exchanges did not fit the definition of a security. The SEC appealed this ruling in October, seeking further clarification on XRP’s legal status.
Regulatory Optimism Under Trump Administration
The founders of the LondonCryptoClub newsletter service attributed XRP’s surge to expectations of more crypto-friendly regulation under the administration of President-elect Donald Trump. They told CoinDesk:
“XRP is one of the main beneficiaries of a friendlier administration under Trump and specifically the likely exit of [SEC Chair] Gary Gensler, who has embroiled Ripple Labs in legal battles that could come to an end with his departure.”
– LondonCryptoClub Founders
The founders even suggested the possibility of a meeting between Ripple’s CEO and Trump, reinforcing the notion that the regulatory environment is poised to become significantly more favorable to companies and tokens like Ripple.
Bullish Sentiment in XRP Options Market
Notably, the price surge above $1 is consistent with the bullish positioning in the options market earlier this week. Moreover, it is accompanied by a spike in open interest on futures to a record high of $1.53 billion, according to data source Coinalyze. An increase in open interest alongside a price rally is said to validate the uptrend.
As the SEC grapples with legal challenges and the prospect of a more industry-friendly regulatory landscape under President-elect Trump looms large, XRP’s fortunes appear to be on the rise. With the ongoing Ripple lawsuit and potential shifts in the U.S. regulatory approach to cryptocurrencies, the coming months could prove pivotal for XRP and the broader digital asset market.
