Ripple (XRP-USD) has been working with the cards stacked against it for almost two years now. Atop its regular business and efforts to expand, the crypto has been pinned to a wall by the U.S. Securities & Exchange Commission (SEC). But with the battle seemingly coming to an end, investors now wonder what XRP might do. Could the end of Ripple’s lawsuit be an XRP catalyst?
Indeed, investors learned this week that Ripple might finally break free of its long-fought litigation with the SEC. Both sides have submitted filings for summary judgement. If approved, a judge could provide the court with a final ruling on the case. The case could also be dismissed outright — a whimper of an ending where one might hope for a bang.
The suit involves Ripple’s sale of the XRP crypto. The SEC calls XRP a security, using the Howey test to back its claim. Under this test, the SEC asserts users invest money into the coin with an expectation of profit derived from the efforts of a third party — in this case, Ripple Labs.
Ripple, on the other hand, asserts that XRP is a currency and nothing more. It doesn’t make a distinct promise of gains to buyers. It also outfits XRP with a specific purpose beyond simply rising in value; XRP is meant to underlie the company’s cross-border payments system.
Whether or not the judge rules in favor of the SEC will be a huge determinant for the rest of the crypto industry. If it is deemed a security, the SEC has fodder to go after dozens — if not hundreds — more crypto projects for the same offense of unregistered securities offerings. If the case is ruled in favor of Ripple, though, the decision could lead to a huge uptick in XRP’s value. Or could it?
Will the XRP Crypto Benefit From Final Ruling in SEC Case?
The implications of this court case for the broader crypto world are obvious. What is less obvious is what this news would mean for the XRP crypto.
It’s safe to assume that XRP would drop off in the case of a SEC victory. Ripple Labs would have to pay out a hefty sum if it’s guilty of a $1.3 billion illegal offering. That’s going to cut into the company’s operating costs — and likely set a precedent for restrictive crypto legislation to boot, hampering any new projects going forward.
But say Ripple wins the suit. Will that mean a huge price boom for XRP, sending investors to the moon? Well, that’s not a guarantee either.
Take Ethereum’s (ETH-USD) recent Merge, for example. The upgrade is Ethereum’s biggest ever, completely overhauling the infrastructure on which the network runs. Investors had been anticipating the event for years. But when it came and went this month, ETH prices actually sank by $400.
In the case of XRP, things aren’t expected to be much different. Even in the wake of hugely positive news, price hikes may not be in the cards. In fact, Coin Telegraph analysis shows that XRP risks a sizable 30% downturn, even with a court case victory.
Market conditions simply aren’t favorable for a moonshot. After all, the Federal Reserve is keeping its boot on the neck of the market with rate hikes. If these policies continue, it could spoil XRP’s victory parade and then some.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.