The XRP token has seen an increase of 66% due to a judge ruling against some of the Securities and Exchange Commission's accusations. SOL (Solana) and ADA (Cardano) tokens have both grown by 33% and 23%, respectively. Additionally, MATIC (Polygon) and ALGO (Algorand) coins have gone up 20% and 14%. This news has caused a stir in the cryptocurrrency industry, and Coinbase has already taken action to re-list XRP after Thursday's ruling.
XRP, the token of Ripple, rose 68% in the past 24 hours, becoming part of a broader rally of large-cap altcoins as crypto traders analyzed an important court ruling that could weaken US regulators' efforts to neutralize digital asset trading. Additionally, Solana's SOL and Cardano's ADA tokens rose 26% and 21% respectively, while Algorand's ALGO and Polygon's MATIC tokens increased 12% and 9% respectively. All four tokens had recently been specified as securities in the US Securities and Exchange Commission's lawsuits against prominent cryptocurrency exchanges such as Binance and Coinbase.
US District Judge Analisa Torres' judgment on Thursday questioned that classification. For three years, the SEC and Ripple Labs - the creator of Ripple blockchain and issuer of the XRP token - have been combating in courts over whether the XRP, the fourth-largest cryptocurrency in the world, can be considered a security. In 2020, the SEC accused Ripple Labs, its CEO Brad Garlinghouse, and its executive chairman of breaching securities law by selling XRP of $1.4 billion in value. Ripple insisted its coin is not a security, sparking further ambiguity about which digital coins should be categorized under which regulatory framework.
Since the SEC's lawsuit against the blockchain startup based in San Francisco was considered a benchmark for the whole industry, people speculated the agency might be forced to decide which of the nearly 20,000 crypto tokens fall under its authority. Judge Analisa Torres' ruling on Thursday stated that XRP is "not necessarily a security on its face". This decision gave industry participants a feeling of relief because it was seen as a victory for both XRP and other coins. Renato Mariotti, a former US Justice Department's Securities & Commodities Fraud Section prosecutor and now a trial partner in Chicago at Bryan Cave Leighton Paisner, remarked the ruling impaired the SEC's argument that almost all tokens are securities and put some of the agency's recent enforcement actions in danger.
The industry has expectations that the recent measure taken on Thursday could prompt Congress to come up with a more judicious regulatory system, noted Mariotti. Without definite legislation though, uncertainty will still remain, he added. This has nevertheless triggered a sense of exhilaration on crypto markets. Coinbase has already taken steps to reset XRP on the market since Thursday. The current enthusiasm in crypto markets has drawn parallels with the crypto peak in 2021, when various alternatives to bitcoin, or altcoins, saw their prices go up significantly after bitcoin experienced a resurgence.
Judge Torres provided Ripple with a partial win, as she indicated some sales of XRP constituted investment contracts that meet the legal criteria of a security. Institutional investors, she stated, should have gone through the proper registration process with the SEC given the agreements in place to lock up the tokens. However, the judge ruled “programmatic sales” of the token via crypto exchanges do not count as securities. This ruling may call into question the SEC's recent enforcement actions against exchanges. Investors should remember that what makes an asset a security isn't necessarily the asset itself, but the way it is sold and marketed. This is a complex aspect with which the court will likely continue to grapple, possibly leading to an appeal and potential reversal of some of the outcomes.
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