It took me several days to fully grasp the significance of the Ripple vs. SEC case verdict. Undoubtedly, it marks a pivotal moment for the cryptocurrency industry and, particularly, Ripple as a company. In my assessment, the verdict appears to lean 10% in favor of the SEC and 90% in favor of Ripple. Allow me to explain why.
Firstly, it is crucial to recognize that the SEC had never lost a crypto-related case in court before this ruling. This was largely due to judges' limited understanding of cryptocurrencies, leading them to favor the SEC as the primary regulatory authority with the public's best interests in mind.
However, the situation changed when Judge Torres, who is arguably the most knowledgeable US judge on crypto matters, delivered her ruling. Remarkably, she upheld the existing Howey test but offered a clear definition that would impact the entire crypto space. Since no new laws were introduced or existing ones amended, the SEC faces a challenging path to take the case to the second circuit. Consequently, Gary Gensler's prior claim that regulations were unequivocal and required no legislative changes stands on shaky ground.
Another consequence of the ruling is the possible scrutiny of Ethereum's initial coin offering due to Ripple's successful defense against charges involving institutional investor sales.
Gensler remains steadfastly delusional in his belief that it was the judge’s opinion on XRP rather than a judgment per se. Yet, a hearing before the subcommittee on Financial Services, where Senator John Kennedy questioned Gensler, indicates otherwise (see video). Gensler's lack of transparency, including scrubbing public calendar meetings for months, raises questions about his dealings with FTX. The revelations cast doubt on his actions and underscore the need for greater scrutiny of those in power.
While the SEC plans to appeal the ruling, such a hearing could take years. In that time, Congress may introduce clearer regulations, further propelling XRP's advancement. As it stands, XRP's prospects look promising.
Even Mike Novogratz, a billionaire Wall Street veteran, and Bitcoin investor, criticized Gensler's handling of the case. He pointed out that Gensler's claims of clear laws were contradicted by the judge's ruling.
Democratic Congressman Ritchie Torres also expressed dissatisfaction with Gensler, accusing him of sabotaging the crypto industry. Torres openly questioned whether Gensler would reconsider the commission's approach in light of Judge Torres' decision.
Undoubtedly, the ruling has bolstered hopes of achieving regulatory clarity in the crypto world. There is a possibility of a bill passing through the House and garnering bipartisan support in the Senate, paving the way for a unified global regulatory framework.
As for XRP's future, the judgment appears to favor Ripple. US banks such as JP Morgan, BOA, and BNY Mellon will likely be unable to purchase XRP directly from Ripple due to their classification as securities. Nevertheless, they may still acquire XRP through exchanges. Ripple's strategic position, along with the court's encouragement for settlement talks with the SEC, places it in a favorable position.
To better understand XRP's potential, let me highlight its numerous use cases and possibilities in the financial sector. The remittance industry, encompassing fund transfers worldwide by individuals and companies, presents a substantial opportunity for XRP and XLM. Despite not facing any legal action from the SEC, XLM also enjoys regulatory clarity. Both cryptos possess transaction speed and low fees, positioning them to challenge traditional banking methods in cross-border transactions.
Moreover, in the upcoming era of the fourth industrial revolution, the tokenization of assets will gain significant traction. The world’s biggest asset manager BlackRock’s Larry Fink passionately talks about the power of tokenization. XRP, with its technology, market dynamics, adoption rates, partnerships, and strong leadership, could play a pivotal role in tokenizing value across various markets, representing a staggering potential worth over $1.3 quadrillion.
Additionally, on-demand liquidity (ODL) and automated market makers (AMM) are set to become lucrative avenues for XRP. The recent developments, including the introduction of FedNow, crypto ETF applications by leading asset managers, and the congressional push for crypto bills, all coinciding in a short span, are hardly coincidental. The opportunity to purchase XRP at lower prices has passed. The longer the base, the higher the space!
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Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and multi-billion dollar portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office, and a hedge fund.