XRP is set to have a “ripple” effect on the future of crypto. Regulators took Ripple to court on accusations that XRP qualifies as a security and should be regulated. However, traders are confident that Ripple will win in court and their favorite cryptocurrency will soar. While Bitcoin jumped over the $28,700 mark, altcoins are showing higher price increases.
In the past 24 hours, XRP price surged over 20% after reports of Ripple being well-placed to win its case against the SEC. And as traders gained more confidence in the asset, the trading volume re-entered the $1 billion range. The substantial volume and soaring price are jabs to regulators who have been left embarrassed by their weak lawsuit. At the time of writing, XRP is trading over the $0.445 range, and its moving averages show a bullish trend. And while the current price is off its one-year high of $0.9, momentum seems to be on its side. But what is the ongoing legal battle about, and what could its verdict mean for the broader crypto industry?
Ripple is a San Francisco-based company that provides infrastructure for cross-border payments through blockchain. Ripple has become one of the most famous names in the crypto industry, but not only for providing payment solutions. For nearly two years now, Ripple has been locked in a high-profile lawsuit with Ripple. The case centers around whether or not XRP, the digital asset created and sold by Ripple, should be classified as a security and, therefore, subject to registration with the SEC.
The SEC accused Ripple and its executives of violating the Securities Act of 1933, which established the “Howey Test” for securities. The Howey Test is a legal test used by US courts to determine whether a transaction constitutes an investment contract and, therefore, security. It states that if a transaction is an investment of money “with a reasonable expectation of profits,” it qualifies as a security.
On the other hand, Ripple argued that XRP is a cryptocurrency like Bitcoin and Ethereum and, therefore, should not be considered a security. Also, the crypto company claims that XRP Price does not satisfy the Howey test as there was never an investment contract between XRP buyers and Ripple.
According to lawyers working on the case, the legal battle is about to come to a close as the federal judge, Analisa Torres, could make a key ruling. It can either hand Ripple or the SEC a victory and even send the case to a trial. Reports say that Judge Torres has sided with Ripple on various motions in recent months. It includes Ripple’s request to the court to compel the SEC to produce certain documents related to the agency’s decision-making process. Ripple argues that these documents are critical to its defense in the case and that the SEC has not provided them despite repeated requests.
Crypto enthusiasts and investors are closely following this case as it could set a precedent for how regulators treat cryptocurrencies and their issuers in the US. To date, there has been no formal classification of digital assets. Hence, crypto’s legal status is open to interpretation by the SEC and the CFTC, leading to a turf war over which regulator should regulate cryptocurrencies. In addition, the outcome will also decide whether the SEC’s current test for classifying securities should apply to digital currencies.
If the court decides that XRP price is a security, it would mean that almost all other cryptocurrencies might be classified as unregistered securities. Hence, rendering cryptocurrencies subject to the SEC’s oversight. Consequently, crypto businesses would need to register and report obligations, and those who issued tokens without SEC’s approval could face legal repercussions. The next few weeks will be vital in deciding the future of crypto regulations in the US, and it will have a sizable impact on the entire crypto industry.
Dozens of crypto whales are bracing for some XRP price action, making investors more excited about what could happen in the short term. Twitter user Ali shared that over the past month, 50 whales holding 10 million to 100 million XRP have joined the Ripple Network. According to another Twitter account, Whale Alert, over 144,000,000 XRP has been recently transferred from one unknown wallet to another. All these data show that the crypto whales are preparing for something big, one way or another. You can get your hands on some XRP tokens on popular exchanges like Gate.io if you’re bullish on Ripple winning the legal battle. Experts predict that the court verdict can potentially push XRP beyond its one-year high of $0.9, paying holders decent profits.
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