In a stunning turn of events, the price of XRP, the cryptocurrency associated with Ripple Labs, has skyrocketed past the $1 mark, reaching a three-year high. The rally comes amidst growing legal troubles for the U.S. Securities and Exchange Commission (SEC) and anticipation of a more favorable regulatory environment under the incoming administration of President-elect Donald Trump.
SEC’s Legal Woes Mount
The SEC’s legal challenges could have significant implications for its pending appeal in the Ripple case, where a court ruled 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 a lawsuit against the SEC, accusing the regulator of overreach in its enforcement actions against digital asset exchanges.
The SEC has unilaterally declared its regulatory authority over cryptocurrencies by categorizing them as investment contracts, like stocks and bonds.
– Excerpt from the lawsuit filed against the SEC
The lawsuit, filed in the U.S. District Court for the Eastern District of Kentucky, argues that the SEC has overstepped its authority by unilaterally declaring regulatory power over cryptocurrencies, classifying them as investment contracts such as stocks and bonds. It further contends that digital assets are simply assets, not investment contracts, and the SEC’s approach encroaches on states’ rights to regulate the industry themselves.
Ripple Effect on XRP Price
The lawsuit’s outcome could have far-reaching consequences, particularly considering the SEC’s appeal in the Ripple case, which is one of the most significant factors influencing XRP’s price. In December 2020, the SEC sued 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 XRP sales to institutional investors qualified as securities transactions. However, it also determined that XRP sales on public exchanges do not fall under the definition of a security. The SEC appealed this decision in October, seeking further clarification on XRP’s legal status.
Anticipation of Crypto-Friendly Regulation
According to the founders of the LondonCryptoClub newsletter service, XRP’s surge is fueled by expectations of more crypto-friendly regulation under President-elect Donald Trump’s administration.
XRP is a key beneficiary of the more friendly Trump administration and specifically the likely departure of [SEC Chair] Gary Gensler, who embroiled Ripple Labs in litigation that may vanish along with his leaving.
– LondonCryptoClub founders
The founders added, “There are even suggestions of a possible meeting between Ripple’s CEO and Trump, which would heighten the sense that the regulatory environment is set to become significantly more favorable for companies and tokens like Ripple.”
Bullish Sentiment in Options Market
Notably, the price surge above $1 aligns with bullish positioning in the options market earlier this week. Moreover, it is accompanied by a rise in futures open interest 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 confirm an uptrend.
As the legal landscape shifts and the crypto community eagerly awaits a potentially more accommodating regulatory environment, XRP’s price continues to soar. With the SEC facing mounting legal challenges and the prospect of a crypto-friendly administration on the horizon, many are watching closely to see how high XRP can climb and what the future holds for the digital asset.
