The Ripple v. SEC court case has brought forward many landmark decisions within the cryptocurrency industry. The saga began in 2020 when the SEC alleged that Ripple had raised over $1.3 billion through an unregistered security offering.
Since then, the gloves have come off, with both Ripple and the SEC digging their feet in. Until now, cryptocurrencies have been mostly unregulated within the state of California. No crypto has been viewed as a security, meaning there was no reason for any registration and tracking of its transactions like traditional financial institutions are legally obliged to do.
All eyes are on the upcoming proceedings between Ripple and SEC, which could see XRP become a security in California.
Crypto in California
Buying and selling crypto in California has been popular since the inception of cryptocurrencies. California has the highest usage of Bitcoin in the US, showing just how big crypto is for the state.
While Bitcoin remains the original crypto and still the darling of investors, many other tokens are making their mark too. Whether it’s the next meme coin, offering lower prices to give everyone a chance to invest or more well-known cryptos like Ethereum, California is a hotspot for cryptos, with Los Angeles alone having more than 400 blockchain businesses.
As Alan Draper suggests, the best new meme coins to buy in 2024 are quickly taking center stage and it’s clear to see why. Not only are new cryptos offering cheaper prices, but with the ongoing legal battles for some of the big cryptos like XRP, traders are looking for alternatives, opening up the market to a much larger audience.
As you’ll come to see with the ongoing case between the SEC and Ripple, both parties are fighting with all they have to ensure the best outcome for everyone. However, what is evident is that California is a crypto-loving state, and it’s going to take a lot to change that. Many Californian businesses are taking crypto in their stride. There are also a range of ways to buy and sell crypto in California, so the ruling to classify a large cryptocurrency like XRP as security could see many unhappy customers.
SEC v. Ripple Lawsuit
When the SEC v. Ripple lawsuit began in 2020, nobody could have predicted where it was heading. The SEC came in hot, alleging that Ripple, the developer of XRP had raised $1.3 billion through selling XRP as an unregistered security.
The battle continued, with Ripple stating that XRP was never intended to be a security and thus the laws did not apply to the crypto. The heated case had many in the crypto industry worried about the regulations surrounding crypto in the US, which until now had largely been unregulated.
By the end of the case, both parties were somewhat victorious. In July 2023, Judge Torres officially ruled that XRP was not a security, a big blow to the SEC. However, the SEC emerged with the ability to oversee sales to institutions. Before, institutional investors could place massive amounts of capital into crypto and blockchains. The judgment handed down meant these institutions now have to register with the SEC, meaning lots of extra paperwork, time, and costs.
Public trades in XRP are allowed, as they were before because the ruling recognized that transactions on exchanges were not securities transactions. However, the loss comes in how blockchain developers can raise money for future projects, with institutional investments now needing to register, making it that much more difficult to find investment.
As it Stands
After 2023, the XRP proceedings left many unsettled, with many unanswered questions. As of June 20, 2024, the gloves are off yet again with a civil securities lawsuit against Ripple getting the green light.
Industry experts predict that XRP could be the first crypto to be a security in California. While the SEC is doing everything it can to downplay Judge Torres’ ruling, there is no denying that the evidence brought forward was sufficient to make the landmark judgment.
Now, with U.S. District Court Judge Phyllis Hamilton presiding over the case, it is being left up to a jury to decide if the tokens are seen as security when exchanged with retail buyers.
If the jury rules in favor of the SEC, it would be a first, seeing XRP as a security in California and not in New York. Nonetheless, Ripple CEO Brad Garlinghouse is putting all his cards on the table, showing a willingness to take the fight to the Supreme Court of the US if that’s what it takes.
What Effect Does the XRP Ruling Have on the Crypto Market
The SEC v. Ripple lawsuit is a landmark case for the cryptocurrency industry. It is a first, with many eyes on both the SEC and Ripple to see what the next move is.
It’s clear that if Ripple is going to do all it can to see that crypto remains predominantly unregulated. The underlying financial implications of the case could be colossal as crypto’s underlying value lies in the very fact that it’s meant to function as an alternative currency that is beyond the reach of central authority. Changing how the public trades cryptos like XRP could impact the market dramatically.
One of the big pros of crypto is that there doesn’t have to be a cumbersome registration process to trade in it at scale. It’s simple and quick, allowing traders to become investors with just a few clicks. If institutions make trading crypto difficult, it’s going to be a big ask for any who wants to simply try their hand at small trades before making big money investments.
Cryptos also aren’t always about large investments with big corporations. Many choose to use cryptocurrencies for increased security and lower transaction costs. In industries like crypto betting, cryptocurrencies ensure that users are safe, transactions are secure, and experiences are more private and anonymous. Online gambling is enjoyed worldwide and XRP makes cross-border transactions simple and efficient. A change in legislation could, therefore, have a far-reaching effect on other industries too.