ripple (CCC: XRP-USDIt is designed to be worth one dollar. It is a payment system backed by banks. It is designed to make electronic transactions friction-free at a cost of 0.001 cents. This is in contrast to Bitcoin (CCC: BTC-USD), of which supply is limited.
For its proponents, Ripple represents an existential threat to the financial system.
This may be true for the financial system as well, because in December the Securities and Exchange Commission (SEC) commissioned Ripple Labs and co-founder Christian Larsen to run an unregistered security offering in its token distribution. The Securities and Exchange Commission was calling Ripple illegal.
Before the SEC acted, XRP was the third most valuable cryptocurrency after Bitcoin and Ethereum (CCC:ETH-USD). Today is the fifth, after falling behind Binance (CCC:BNB-USD) And pregnancy (CCCUSDT-USD). Ripple’s market capitalization is around $42 billion.
XRP and SEC
A judge gave Ripple’s attorneys the right to see the SEC’s minutes and notes on how the agency decided to act. Ripple’s lawyers believe that if they can prove that the agency once believed Ripple was a currency, it would be outside the agency’s jurisdiction and the case would fall apart.
The discovery win is a crucial step for Ripple. The Securities and Exchange Commission (SEC) already recognizes Bitcoin and its rival Ethereum as “non-security” currencies or instruments. If the court eventually rules on Ripple, it could also create guidelines on when other crypto assets will become real currencies.
The timing of the SEC lawsuit is also worrisome. After all, Ripple has been around for eight years before the agency acted. Why did you suddenly move in the dying days of the Trump administration? The discovery may answer that question.
The news briefly pushed XRP above the $1 target. She was holding about 96 cents this morning. A week ago, it was 55 cents, so the speculators did very well.
The problem with Ripple is that it shouldn’t have such fluctuations.
If it is a store of value, such as the dollar, rather than a speculative asset, such as Bitcoin, then Ripple must retain its value when the trade is completed. The dollar remains a dollar as an oil tanker moves from Saudi Arabia to Houston.
The aim of Ripple Labs is not to give speculators a profit. It is the creation of a sustainable market that frees companies from the cost of currency exchange. Before the SEC’s move, Ripple was moving in this direction, adding a protocol called Flare to its network and distributing its Spark token (FLR) in what’s called an “airdrop.”
As Sarah Smith wrote at the time, the goal was to help Ripple compete in decentralized finance against Ethereum. You compare what Ripple did to Flare with what Square (NASDAQ:mint) to donate cash to start the Cash app.
The biggest news for Ripple Lab may be its purchase of 40% of Tranglo, a cross-border payments specialist in Southeast Asia. This will expand the use of the On Demand Liquidity (ODL) service, allowing for easier cross-border money transfers.
Before the recent moves, Ripple was weakening. It lost 17% of its value in three days during late March and appeared to be heading towards 40 cents. Now it’s moving higher, but it’s still very volatile.
The recent win is an important step towards making the Ripple digital dollar worth one dollar. But Ripple will not fulfill its destiny until that happens, or at least until XRP can retain its value when executing trades.
At the time of publication, Dana Blankenhorn did not own any shares, directly or indirectly, in the shares mentioned in this story. It does not currently hold any cryptocurrency.
Dana Blankenhorn He is a financial and technical journalist since 1978. He is the author of The Big Bang of Technology: Yesterday, Today, and Tomorrow with Moore’s LawAvailable on the Amazon Kindle Store. write it on email@example.comTweet him on Tweet embed, or subscribe to his Substack https://danaflankenhorn.substack.com/.