XRP vs SEC: Its Legal Victory and What It Means for 2025 Investors
INTRODUCTION
XRP is a digital currency developed by Ripple in 2012, with the sole purpose of enabling a fast and low-cost payment system between financial institutions, which means it is a cross-border payment system between two currencies.
How Does XRP Work
The total supply of XRP is 100 billion, which was pre-mined when the cryptocurrency was launched. The current circulating supply of the token is approximately 58.4 billion, with the remaining being held by Ripple. A portion of which is released every month.
XRP, as the native currency of the blockchain XRP Ledger, is used to pay transaction fees on the network. The minimum transaction rate is 0.0001 XRP, where there might be a slight increment in price when there is network congestion. The slight difference between XRP token and other gas tokens is that the transaction fee is burned instead of being distributed to the miner or validator in other gas tokens. It acts as a bridge token on the XRP Ledger’s decentralized exchange. Helping users to easily swap or trade between tokens that are not directly paired on Decentralized Exchange, making XRP the settlement token on Decentralized Exchange (DEX), just exactly as it is used as a bridge currency in cross-border payments to make transactions between two different fiat currencies.
XRP’s Real World Use Cases
XRP and its blockchain mission are to provide a faster and lower-fee payment service. It aims to be an alternative to the traditional cross-border payment network, such as SWIFT. Ripple connects Financial institutions, Payment Providers, and banks worldwide, utilizing its blockchain XRP Ledger to settle payments between two participants. Aside from that, it has partnered with different financial institutions for everyday payment services.
Recent improvements to the XRP ledger have allowed its usage to be extended beyond payments. This includes Decentralized Finance (DEFI), real-world assets, tokenization, gaming, and NFTs.
Ripple has also issued its stablecoin RLUSD on the network.
Where To Buy XRP
You can buy XRP on major exchanges like Binance, Bybit, OKK & Coinbase.
It can be stored in wallets that support the blockchain, such as TrustWallet, Exodus, Edge, etc.
XRP And U.S Securities And Exchange Commission (SEC) Lawsuit Developments
In December 2020, the U.S. SEC filed a lawsuit against Ripple, the Founder Brad Galinghouse, and its co-founder Chris Laser, stating that they raised over $1.3 billion through the unregistered, digital by sale of XRP. Hence, alleging that XRP was an unregistered security and did not follow the normal procedure of registration of securities.
In July 2023, Judge Analisa Torres of the U.S. District Court stated that XRP is not a security when sold to the general public, but its direct sales to institutional investors did seem to be an unregistered security offering.
In August 2024, Ripple was charged a $125 million fine for the institutional sales.
On May 8, Ripple and the SEC reached a settlement agreement, proposing that Ripple would pay a $50 million fine, reduced from the original $125 million penalty.
Why Does This Matter To Investors?
The settlement has had a positive impact on XRP’s market performance. Following the announcement, XRP experienced an uptrend, boosting investors’ confidence. As of today, June 2nd, XRP is trading at ~215
The legal settlement with the SEC has also opened doors for potential development, such as the Exchange Traded Fund (ETF), which could further enhance its market presence and accessibility to institutional investors.
What Investors Should Look Out For
With the legal settlement, investors can view XRP more stable and promising asset. But it is better to consider factors such as the market volatility, regulatory changes in other institutions, and the overall performance of the crypto ecosystem.
Investors should also do a thorough market research to check out the risk, how they can profit from it, and also stay informed on recent developments with Ripple and news around XRP and its adoption in the financial sector. It will help to give them more insight into their investment decisions.
NB:
- Ripple is a company that builds a system that helps Financial institutions send money to each other that is faster and with a lower transaction fee, especially when sending money to a different country.
- XRP is the digital currency that is created by Ripple. It is a digital currency that acts as a bridge between two currencies.
- XRP Ledger is a decentralized blockchain that tracks all XRP transactions. It is an open network that every user can use.
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Conclusion
The recent resolution of Ripple with the SEC that XRP is not a security has been a positive development. It has made way for the adoption of XRP into the financial sector. While there are many good opportunities with this development, investors should be well informed in making their decision when investing.