Renowned Wall Street veteran Linda Jones foresees a significant surge of institutional capital waiting to enter the XRP market, but the timing remains uncertain.
XRP has been a recurrent topic among experts, capturing substantial attention in 2023 due to the ongoing legal battle between Ripple Labs and the US Securities and Exchange Commission (SEC).
The crux of the matter lies in the SEC’s allegations that sales of XRP, both primary and secondary, qualify as investment contracts, essentially asserting that XRP should be classified as a security.
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Should this claim prove true, Ripple could be implicated in conducting an unregistered securities offering surpassing a value of $1 billion. Furthermore, XRP would fall under the regulatory oversight of the SEC.
Legal Clarity is Core
Numerous analysts and XRP proponents argue that the protracted legal dispute has significantly suppressed the token’s price. However, Linda Jones contends that it will ultimately be institutions that propel XRP’s value upward, provided they receive more legal clarity.
Although Judge Analisa Torres recently ruled partially in favor of Ripple, concluding that secondary sales of XRP do not constitute investment contracts, the legal proceedings are far from conclusion. Jones highlights the part that congressional lawmaking would play in bolstering the price of XRP.
Jones states, “It’s institutional money that will drive XRP’s price higher, in my opinion. Institutions need legal clarity and framework. The lawsuit was one important piece of that. More Congressional lawmaking is needed, but it will happen. After that, the money will flow in a huge wave. They are preparing.”
The Path to Legal Clarity
While the ongoing legal case between Ripple and the SEC has provided some initial relief for XRP, the ultimate resolution, and future market trajectory will depend on further legal developments.
The engagement of institutions and the enactment of congressional laws to establish a clearer regulatory framework are expected to play a pivotal role in unlocking the potential of XRP and attracting substantial investment into the digital asset.
As the market eagerly awaits clarity on XRP’s regulatory status, attention turns to the actions of institutions and lawmakers, whose decisions will shape the path forward for Ripple’s asset and potentially unleash a wave of capital into the XRP ecosystem.
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The SEC lawsuit against Ripple Labs
The SEC lawsuit against Ripple Labs alleges that the company raised over $1 billion through the sale of unregistered securities. The SEC claims that XRP is a security because it was sold by Ripple as an investment contract, which is a type of financial instrument that gives investors the expectation of profits from the efforts of others.
The SEC’s lawsuit is based on the Howey test, which is a four-part test that is used to determine whether a financial instrument is a security. The Howey test asks the following questions:
- Is there an investment of money?
- Is there an expectation of profits to be derived from the investment?
- Are those profits to be derived from the efforts of others?
- Is there a common enterprise?
The SEC argues that XRP meets all four parts of the Howey test. The SEC claims that investors in XRP put their money at risk in the expectation of profits that would be derived from the efforts of Ripple Labs and other third parties. The SEC also argues that XRP is a common enterprise because it is used to facilitate transactions on the Ripple network.
Read Also: The Last Time XRP Exhibited this Pattern, it Rallied 15,400% in Less Than A Year
Ripple Labs has denied the SEC’s allegations and has argued that XRP is not a security. Ripple argues that XRP is a digital asset that is used to facilitate payments and other transactions. Ripple also argues that XRP is not subject to the Howey test because it is not an investment contract.
The SEC lawsuit is still ongoing, and it is unclear how it will be resolved. Judge Analisa Torres just granted the SEC’s request to appeal the XRP ruling. However, there are still more approvals needed by the SEC before it could proceed to appeal.
So far, the lawsuit has had a significant impact on XRP’s price, and it is likely to continue to be a major factor in the cryptocurrency’s future.
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