XRP has become the unlikely White Knight of cryptothwarts its regulatory opponents and pulls the market out of the doldrums.
The price of XRP surged 78 percent after a U.S. judge ruled on July 13 that issuer Ripple Labs’ sales of the token on public exchanges did not violate securities laws, and is still up about 47 percent. According to CoinMarketCap, its market capitalization has increased from US$25 billion (approximately Rs.2.04.6 trillion) to US$36 billion (approximately Rs.2.94.7 billion), and its crypto market share has increased to 3.5% from 2 percent before the ruling.
Ripple’s landmark victory has shaken up the broader market altcoins – Cryptocurrencies excluded Bitcoin – As much of the regulatory scrutiny of the sector focuses on whether some tokens should be classified as more tightly regulated securities.
“It is a major milestone for the altcoin sector. It is safe to assume that if XRP is not a security, hardly any other digital asset can be considered in this way,” said Matteo Greco, an analyst at fintech and blockchain investment firm Fineqia International.
In fact, according to CoinGecko, the market cap of altcoins has increased from $636.38 billion (approximately 52.09.000 crore) before the verdict to $665.2 billion (approx SEC has increased by 11 percent.
“For the first time, it seems like we have traffic rules for evaluating these tokens,” said Ben Weiss, CEO of crypto ATM network CoinFlip.
The jubilation spread across the crypto space, with bitcoin — which is generally viewed more as a commodity than a security — hitting a 13-month high following the ruling, though it has since fallen back below $30,000 (roughly Rs. 24,55,400).
XRP vs Stablecoins
However, things are certainly not going entirely smoothly for Ripple or altcoins in general. According to some legal experts, the SEC is likely to appeal the ruling, although trading volume in the crypto space is still low compared to last year.
The lawsuit, coupled with the rise of competitors like stablecoins, also impacted the use of the token in practical applications like payment processing and remittance.
Ripple Labs said last week that its quest for solid crypto regulation in the US is far from over. Meanwhile, the company stated that it will continue to invest in jurisdictions that have put in place clear regulatory frameworks.
The company has been relisted by several crypto exchanges following its legal success and some institutional investors are taking note; A Coinshares survey of 51 digital wealth managers managing $900 billion (approximately Rs.73.66.4 billion) in assets found 10 percent of investors are investing in altcoins, up from 5 percent last month, with some trimming their positions in Ethereum and Bitcoin in favor of smaller altcoins like XRP and Polkadot.
“The legal clarity of the token itself once again opens the door to the long-cited use cases of Ripple as a settlement layer,” said Joseph Edwards, head of research at Enigma Securities.
He pointed out that the massive growth of US dollar stablecoins since 2020 is a factor in the decline in the use of XRP in settlements and remittances as these tokens are favored for use in cross-border payments.
“A lot depends on how much dry powder Ripple Labs needs to provide for new business development initiatives,” Edwards said.
© Thomson Reuters 2023
(This story was not edited by NDTV staff and is auto-generated from a syndicated feed.)
