The Landmark ruling in the SEC v Ripple case drove XRP prices to almost double within the past 24 hours.
After the initial surge from the ruling, XRP prices later experienced a slight decline during the early Asian trading hours on Friday, though XRP shorts have logged the highest losses in 2023 so far.
At the time of writing, XRP soared, with its market capitalization reaching $41.44 billion. This surge represents an impressive increase of 66% within the past 24 hours, as reported by CoinDesk data. In comparison, BNB, which previously held the fourth position, witnessed a more modest rise of 6.5% in market value, reaching $40.57 billion. This surge is what led to Ripple overtaking BNB to become the world’s fourth-largest digital asset by market cap.
The Court Ruling
The recent surge in XRP can be attributed, in part, to Ripple Labs' partial victory in its legal battle with the U.S. Securities and Exchange Commission (SEC). The District Court for the Southern District of New York ruled that Ripple's offer and sale of XRP on digital asset exchanges did not meet the criteria of investment contracts as alleged by the SEC.
The court ruling alleviated much of the regulatory concerns surrounding the cryptocurrency, opening the doors for a renewed listing of XRP on multiple exchanges.
However, the court ruling was only a partial win. While the first part of the recent court ruling brought some relief to Ripple Labs regarding the classification of XRP, the court also said that Ripple's direct sale of XRP to institutions and other parties violated securities laws.
This aspect of the ruling deems Ripple's actions in relation to specific sales were in violation of securities laws, indicating that the court considers certain aspects of XRP to be securities. As per Townsend Lansing, Head of Product at CoinShares, this could be interpreted as an affirmation that XRP should be classified as a security.
As evident from the current price surge of XRP, traders have yet to focus on the second part of the ruling. XRP was not alone in this regard, however, with cryptocurrencies across the board surging after the ruling, including the likes of Solana (SOL), Polygon (MATIC), and Cardano (ADA), which were deemed unregistered securities in previous lawsuits by the SEC.
While the classification of cryptocurrencies, including XRP, continues to be a complex and evolving matter, the court ruling has weakened the SEC’s stance on the clarity of securities laws for digital assets, highlighting the need for a contextual interpretation of the laws in each individual case, rather than assuming a one-size-fits-all approach for all digital assets. While the SEC maintains that existing securities laws are sufficient to cover the regulation of digital assets, specific guidance and clarity on how existing securities laws should be applied to the rapidly evolving digital asset space could provide market participants with greater confidence and facilitate the development of innovative solutions while ensuring investor protection.