The cryptocurrency industry made a huge leap forward in 2021 after having a tough year in 2020. We have witnessed a massive recovery as Bitcoin and many other cryptocurrencies hit all-time highs. Adoption of digital assets in DeFi, NFTs or the Metaverse market has skyrocketed.
Unlike previous years, when 2021 institutional participation was insufficient, it revealed that large companies are in tune with the thriving ecosystem of cryptocurrencies.
Ripple, in particular, was the hardest hit coin last year, but it has risen surprisingly and has made incredible progress. While the XRP price managed to rise spectacularly in the first half of 2021, the momentum waned in the second half. Still, 2022 could be a great year for Ripple and XRP.
Ripple and its challenging journey in 2021: SEC vs Ripple
On December 22, 2020, the US Securities and Exchange Commission (SEC) sued Ripple for allegedly selling unregistered securities within the country. The $1.3 billion lawsuit came as a shock to XRP holders and the community, considering the behind-the-scenes meetings the blockchain startup has had with multiple local regulators over the years.
More importantly, it set a precedent in the ecosystem due to the lack of regulatory clarity.
Almost a year has passed since the lawsuit was filed, but no conclusion was reached. The lawsuit is stuck at a point where Ripple is asking the SEC to submit documents detailing the regulator’s discussion or rationale for classifying Bitcoin and Ethereum as commodities. Ripple argues that these documents reveal the contradictory nature of the SEC’s decision-making process. Moreover, the documents can help prove that the SEC did not give Ripple fair notice about the acceptance of XRP as a security. However, the plaintiff argues that such important documents are protected by the Negotiation Process Privilege (DPP).
Judge Sarah Netburn conducted a review of these documents to substantiate the authorities’ claims, but the process was inconclusive and a re-briefing was requested from both the SEC and Ripple. The case is likely to spread into next year, so here are the developments you can expect going forward.
If the SEC wins the case
- If the SEC wins the case against Ripple, it will set a precedent for years to come and give the regulator the power to control and regulate cryptocurrency projects.
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Also, a sense of clarity and a set of guidelines can be created for upcoming projects to follow to avoid falling under the scrutiny of regulators.
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Ripple would then have to pay a hefty fine and focus its business elsewhere outside of the west. This scenario may cause other European countries to follow the same path, which will put the company in trouble.
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The XRP price could take a big hit, but it will likely be short-lived.
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The SEC may not sit back after the win and focus on Ethereum as many speculators believe.
If Ripple wins the case
- If Ripple wins the case against the SEC, the regulator will likely step back, which could mean a paradigm shift in securities laws for cryptocurrencies.
- While the potential gain could put Ripple in a safe place, current and upcoming projects may still lack clarity.
- Regulators will have to think twice before taking on other big projects like Ripple.
- XRP price could see a massive spike and set a new record higher.
Besides, although 2021 may seem like litigation and bureaucracy for Ripple, the company has had some notable successes not only in sales but also in partnerships.
With increasing bullish momentum in the cryptocurrency industry, XRP price could break its previous all-time high in 2022. Still, everything will depend on the outcome of the Ripple case with the SEC.
Winning the case could act as a headwind for the bullish argument and push XRP into double-digit territory beyond its all-time high of $3.31. Ripple has important foundations to reach its upward potential as it takes important steps in the eastern hemisphere and signing new partnerships in Europe and Middle East countries.
But if Ripple loses the case, it loses its ground in the US at best. The news could temporarily lower the price of XRP before the market realizes its strong fundamentals.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.