The crypto market cap increased by 2% today, with major altcoin ripple outperforming Bitcoin in terms of daily gains, as investors await the outcome of the ongoing case between XRP and the Securities and Exchange Commission (SEC) in the United States.
According to Coingecko, the global crypto market cap was $1.23 trillion today, a 2.0% increase in the last 24 hours.
Bitcoin (BTC) has remained above $28,000, now trading at $28,325, up 2.3% in the last 24 hours, while Ethereum (ETH) has risen 3.3% in the last 24 hours to $1,800.
Ripple (XRP-USD) has risen 20% in the last 24 hours to $0.46, the highest of the major altcoins.
Ripple has led today’s crypto rally, with XRP enthusiasts stockpiling the cryptocurrency in anticipation of a decision in a long-running court case between the SEC and the Ripple company.
If Ripple prevails in the case, it will set an important precedent for the cryptocurrency industry.
Earlier, the SEC charged the Ripple network with selling unregistered securities late in 2020 after it sold $1.3 billion of its cryptocurrency.
Ripple immediately denied the charge, and a decision in the case, which is being heard in a New York court, is expected soon.
Let’s suppose that the court rules that Ripple’s XRP token should be classified as a security, such as a bond, equity, or derivative. Then, in that case, it could have a negative impact on almost every other cryptocurrency, excluding Bitcoin, because they would be subject to far more regulation than they are now.
A victory for the SEC would strengthen the regulator’s claim that Bitcoin is the only digital asset that is not a security and that all others, including blue-chips like Ethereum and Cardano, are unregistered securities.
The entities that organize and issue cryptocurrencies would face fines for operating unregistered securities, and cryptocurrency projects would be required to file with the SEC to await registration as a security before they could work in the US.
The SEC employs the Howey Test, developed in the 1920s, to determine what is and is not a security. According to this, security is a financial product that receives “investment of money, in a common enterprise, with a reasonable expectation of profits, to be derived from the efforts of others.”
Ripple’s chief legal officer, Stuart Alderoty, claims that the company is certain that XRP does not meet any of the Howey criteria, claiming that there is “no common enterprise” or group project whose efforts affect the value of the cryptocurrency.
“On the core legal issue of whether Ripple offered unregistered securities to the public, I think the SEC has the stronger argument,” Marc Fagel, former regional director of the SEC’s San Francisco office, told Fox Business.
“The case is complicated by the issue of whether Ripple had ‘fair notice’ that XRP was a security,” – he added.
“Even there, I don’t see a compelling legal precedent argument, even if the SEC’s mistakes have brought it to the forefront.”
Possible Outcomes for the Ripple XRP Price
Ripple’s CEO, Brad Garlinghouse, stated that if the SEC wins the case, the company will not be impacted because it will move offshore.
“By far, the majority of our customers are non-US customers,” he said, “So we could absolutely continue to build the business and grow. It’s just that we wouldn’t be a US taxpayer where we probably paid a couple hundred million dollars in taxes here in the US. It serves no purpose to drive us offshore.”
If Ripple is successful in getting the SEC charge dropped, lead trial attorney Andrew Pickett told Finbold: “If Ripple is successful in their lawsuit, it could help solidify XRP’s legality in the US market, which would benefit its price.”