In a stunning turn of events, XRP, the cryptocurrency associated with Ripple Labs, has surged past the $1 threshold, marking a three-year high. The rally comes amidst mounting legal troubles for the U.S. Securities and Exchange Commission (SEC) and growing anticipation of a more crypto-friendly regulatory environment under the newly elected Trump administration.
SEC’s Legal Woes and the Ripple Effect
The SEC’s legal challenges may be tied to the ongoing appeal in the Ripple case, which contends that XRP sales on public exchanges do not qualify as securities. On Thursday, a group of state attorneys general and the DeFi Education Fund filed suit against the SEC for unconstitutional overreach, accusing the regulator of exceeding its bounds when filing enforcement actions against digital asset exchanges.
The lawsuit, filed in the U.S. District Court for the Eastern District of Kentucky, argues that the SEC has unilaterally granted itself regulatory authority over cryptocurrencies by classifying them as investment contracts, such as stocks and bonds. It added that digital assets are simply assets, not investment contracts, and the SEC’s approach encroaches on states’ rights to independently oversee the industry.
The lawsuit could have far-reaching implications, particularly for the SEC’s unresolved appeal in the Ripple case, which is one of the biggest factors influencing XRP’s price.
According to a legal expert familiar with the case
A Ripple Effect on XRP’s Legal Status
In December 2020, the SEC filed a lawsuit against Ripple Labs, alleging that the company conducted an unregistered securities offering by selling XRP, which the SEC classified as a security. Last July, a U.S. court ruled that Ripple’s sale of XRP to institutional investors qualified as securities transactions. However, it also determined that XRP sales on public exchanges do not meet the definition of securities. In October, the SEC appealed this decision, seeking further clarification on XRP’s legal status.
Shifting Tides: A Trump Administration’s Impact
Founders of the LondonCryptoClub newsletter suggested that the XRP surge is linked to expectations of more friendly regulation under the newly elected Trump administration.
XRP is a key beneficiary of a more welcoming administration under Trump, particularly from the potential departure of [SEC Chair] Gary Gensler, who embroiled Ripple Labs in legal battles that might disappear along with his exit.
LondonCryptoClub founders told CoinDesk
There are even speculations about a potential meeting between Ripple’s CEO and Trump, fueling a sense that the regulatory environment will be significantly more favorable for companies and tokens like Ripple.
The founders added
Options Market Positioning and Futures Interest
Notably, the price increase above $1 aligns with options positioning earlier this week. Furthermore, it is accompanied by a surge in open interest for futures to a record $1.53 billion, according to data source Coinalyze. Pundits say the rise in open interest along with the price rally confirms the uptrend.
The Road Ahead for XRP and Ripple
As XRP rides this wave of positive sentiment, all eyes are on the ongoing legal battle between Ripple and the SEC. A favorable outcome for Ripple could set a precedent for the treatment of cryptocurrencies and pave the way for clearer regulatory guidelines. Meanwhile, the anticipated shift in the regulatory landscape under the Trump administration has the potential to reshape the crypto industry as a whole.
For Ripple and XRP, the road ahead appears to be filled with both challenges and opportunities. As the legal drama unfolds and the political winds change, investors and enthusiasts alike are closely monitoring developments, eager to see how this dynamic interplay will shape the future of one of the world’s leading cryptocurrencies.
In the midst of this rapidly evolving landscape, one thing remains clear: the XRP rally serves as a powerful reminder of the complex and often unpredictable forces that drive the crypto market. As regulatory battles rage on and new administrations take the reins, the crypto space stands poised for significant shifts and transformations in the months and years to come.
