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The decision of the US Securities and Exchange Commission to file a case against Ripple Labs has had a significant effect. This unprecedented move has the potential to have far-reaching consequences for the cryptocurrency sector. The issue of whether XRP is a defence or not has long been questioned, but this has been the primary subject of the litigation, and the outcome of this case would even call into question whether the ‘Howey test’ is still applicable in this day and age.
SEC Commissioner Hester Peirce had previously criticized the ‘Howey test’ used by the Supreme Court to determine whether an asset is a security. According to her, the Howey Test has had some challenges over the years, when being applied to the digital currency industry.
What remains certain is an urgent need for clear cryptocurrency regulations. This was yet again, highlighted by Stuart Alderoty, Ripple’s General Counsel.
According to Alderoty, the ‘environment of regulatory uncertainty’ in the US which was a major cause of concern. He stated:
“The SEC continues to regulate the space through enforcement rather than adopting laws rules or regulations.”
He further expressed,
“America’s regulation by enforcement strategy is already driving innovators away to countries like Japan, Singapore, the UK, and Switzerland that has established a clear regulatory framework for crypto. The U.S. is creating uncertainty that hurts markets and consumers while hampering the drive for innovative new approaches to cross border payments, financial inclusion, and more.”
Ripple CEO Brad Garlinghouse has been vocal in his dissatisfaction with the lack of regulatory transparency in the United States even before the trial began. He’d stated:
“We need to either reach a clear settlement that provides that clarity and certainty, or we need to let the judge make that decision.”
Garlinghouse also reported that he ‘felt fine’ about the recent progress the prosecution was made before the litigation proceedings started.
Here’s why XRP looks good despite the lawsuit
As per the official insights provided by Ripple,
“Data indicated that Q1 2021 was a quarter of XRP accumulation. The number of “whale” wallets, defined as wallets with balances of at least 10M XRP, increased from 308 in Q4 to 319 in Q1. Similarly, the number of wallets holding between 1M and 10M XRP increased from 1,125 to 1,196.”
Although the price of XRP has risen amid the SEC case, which was filed in mid-December 2020, interest in the digital asset has more than doubled, according to Google trends. At the time of publication, XRP was trading at $1.45.