In an unexpected turn of events, XRP, the digital asset issued by Ripple Labs, has emerged as a white knight for the cryptocurrency market, thwarting its regulatory foes and igniting a resurgence.
The token's price surged by a staggering 78% after a US judge ruled on July 13 that Ripple Labs' sales of XRP on public exchanges did not violate securities law. The favorable ruling has not only boosted XRP's market cap from $25 billion to $36 billion but also strengthened its crypto market share from 2% to 3.5%, according to CoinMarketCap.
Ripple's landmark victory has had a profound impact on the wider market for altcoins, cryptocurrencies excluding Bitcoin, as regulatory scrutiny increasingly centers on whether some tokens should be classified as more tightly-regulated securities.
Matteo Greco, an analyst at fintech and blockchain investment firm Fineqia International, commented, "It's a big milestone for the altcoins sector. It is fair to assume that if XRP is not a security, barely any other digital asset can be considered that way."
The positive ripple effect of the ruling is evident in the altcoin market, with the altcoin market cap rising from $636.38 billion to $665.2 billion, according to CoinGecko. Additionally, Cryptoquant's index of prices for coins targeted as potential securities by the SEC has surged by 11%.
Ben Weiss, CEO of crypto ATM network CoinFlip, pointed out that for the first time, there seems to be a clearer roadmap for evaluating these tokens.
However, XRP and altcoins' journey towards broader acceptance and adoption faces challenges. The SEC is likely to appeal the ruling, creating uncertainty in the crypto space. Additionally, trading volumes for the entire market remain relatively low compared to the previous year.
Despite the legal victory, XRP faces competition from stablecoins and other altcoins, impacting its use in practical applications like payment settlements and remittances. The rise of stablecoins, particularly US dollar-pegged ones, has eroded XRP's usage in cross-border payments, with institutions favoring these stablecoins.
Ripple Labs recognizes that its pursuit of sound crypto regulation in the US is far from over. While the legal win led to its relisting on several crypto exchanges and garnered interest from institutional investors, the company acknowledges the need to invest in jurisdictions with clear regulatory frameworks.
Joseph Edwards, head of research at Enigma Securities, emphasized that legal clarity on XRP opens the door for Ripple's long-stated use cases as a settlement layer. However, he pointed to the growth of stablecoins since 2020 as a factor affecting XRP's use in settlements and remittances.
The future of XRP and other altcoins hinges on various factors, including potential regulatory challenges and Ripple Labs' strategic decisions in new business development initiatives. As the market continues to evolve, investors are keenly observing the unfolding dynamics, seeking opportunities amidst the changing landscape of the cryptocurrency space.
By fLEXI tEAM