Ripple, a prominent blockchain company, has set its sights on US banks and financial entities, anticipating a rise in the adoption of its cryptocurrency XRP. This follows a recent judicial decision on a legal tussle between Ripple and the Securities and Exchange Commission (SEC).
Ripple’s Triumph in Federal Court
In a precedent-setting verdict last week, a New York judge determined that Ripple was not in breach of federal securities laws for trading XRP on public exchanges. This verdict marks the end of an extended legal confrontation between Ripple and the SEC.
However, the court concluded that Ripple broke the law in selling XRP to institutional investors. Conversely, transactions carried out by Ripple’s CEO, Brad Garlinghouse, and the Co-Founder and former CEO, Chris Larsen, on digital currency exchanges did not amount to the sale of unregistered securities. The judge further noted that Ripple’s staff compensation did not infringe upon federal securities statutes.
Ripple Anticipates Increased XRP Adoption
In a CNBC interview, Ripple’s General Counsel, Stu Alderoty, expressed optimism about initiating dialogues with financial institutions interested in employing Ripple’s On-Demand Liquidity (ODL) service, anticipated to kick-off in the third quarter. This service employs blockchain technology to facilitate the transfer of funds using XRP.
Ripple experienced a significant loss of major financial institutions utilizing its services after the SEC initiated legal proceedings in 2020. Alderoty addressed the court’s ruling that XRP sales to institutional clients constituted an offering of unregistered securities, which should have been registered. He conveyed confidence that the court decision would not significantly impact Ripple, considering that the majority of its operations are conducted outside the United States.
Implications for Future Crypto Regulations
The groundbreaking verdict, which granted Ripple a partial win against the SEC, is anticipated to significantly influence digital assets’ regulatory framework. It is expected to limit the regulatory scope of the SEC in managing the crypto sector. As a result of the SEC’s lawsuit against Ripple, several exchanges, including Coinbase, were compelled to delist XRP.
Nonetheless, following the recent ruling, both Coinbase and Gemini have announced their intention to relist XRP. Kraken has also resumed trading of XRP. The SEC has initiated lawsuits against Coinbase and Binance on similar charges of offering unregistered securities.
