Senator Elizabeth Warren has written to SEC Chair Gary Gensler, requesting information on the watchdog’s “authority to properly regulate cryptocurrency exchanges and to determine if Congress needs to act to ensure that the SEC has the proper authority to close existing gaps in regulation”.
The Senator asks for a response by July 28. She also highlighted the risks to investors and consumers “in this extremely opaque and unpredictable market,” particularly now that trading volumes on exchanges have surged.
The Onus now lies on the SEC to reply with a set of regulations and answers to the Senate. This in a way builds pressure on the SEC to reach a conclusion on the lawsuit against Ripple. It is monumental because if the platform manages to win, the entire Howie Test would nullify and have a huge impact on the entire crypto ecosystem. If this happens the SEC would partly be discredited.
The Security Vs Utility Debate
The SEC has claimed that XRP is a security because of its centralized nature. Ripple, on the other hand, has continued to propose new use cases for the ledger, indicating that it is useful.
Also Read : Ripple’s XRP Price Flips The Bears, How High Will It Rally?
To discredit it as Security, previously legal expert John Deaton has argued that Over time, XRP has demonstrated its utility. Because of its open-source nature, users can pay for goods and services without relying on Ripple in any way.
The lawyer believes The SEC’s argument that there is no XRP without Ripple makes no sense. He also mentioned a Stedas Crypto poll in which over 90% of over 4,000 respondents claimed they don’t believe they hold a share in Ripple just because they own the token
Matt Hamilton, Ripple’s Director of Developer Relations, said on Twitter that Bitcoin developers built XRP as a “better” version of the cryptocurrency and that XRP’s use cases are “essentially the same as Bitcoin.”
He also explained how XRP is independent of Ripple Labs.
All these arguments make Ripple labs’ argument stronger. It already has an upper hand with the previous small wins. This leaves SEC with just two options to fight hard, strike back by proving their point or reach a settlement with XRP.
A Settlement or a Long Battle?
96% of SEC cases are settled before trial, with 60% settling prior to litigation and 90% settling during discovery. This reality simply serves as a preview of what is to come. Anything can happen at any time.
Considering that Judges Torres and Netburn have almost 700 cases pending at any given time, The Ripple Vs SEC lawsuit could stretch for a really long time. As for the market, they probably don’t care who wins. They just want it to be resolved.
Now if Ripple and SEC decide to settle things could smoothen out sooner. Although, it has been heard that Ripple would settle only if the cost the SEC wants to impose on the company isn’t too high.
To be clear, there is no indication that a settlement is now in the works. If anything, the case appears to be dragging on until at least 2022.
XRP Price Could Rebound if the Case Settles
Since hitting $1.8392 on April 13, XRP had a tough few weeks, with a low of 0.54 on June 22. This was a 63 percent decrease from its previous high. But that’s okay. XRP Price is still up 187 % year to date from its price of 0.237 on December 31.
XRP could hit $1.26 if it regained half of its recent decline. This equates to an 85%increase in value per token. In other words, even a 50% recovery delivers an 85% return on investment for new XRP investors.
Now, this scenario stands a chance if Ripple settles the lawsuit with the SEC anytime soon. The lawsuit has been partly responsible for XRP’s slow price action, also the nature of the broader crypto market is to blame.
At the time of writing, XRP is trading at $0.610 down by 3.2% in the last 24 hours.