Right after the headlines announcing the bipartisan cryptocurrency bill surfaced, there was a surge in the price of the XRP token. While the crypto market continues to be bearish, a rise in price by 7.6% was certainly noteworthy and it sent a wave of optimism throughout the community. Therefore, this has led many to believe that if the cryptocurrency bill passes, it is likely that the XRP token will see its price explode.
The SEC Suit Against Ripple
Back in 2020, Ripple Labs, the company behind the XRP token, found itself sued by the Securities and Exchange Commission (SEC) in the United States. Two of the company’s executives were also part of the lawsuit, as the agency alleged that they had raised more than $1.3 billion in funds through an unregistered securities offering.
According to the SEC’s allegations, the former chief executive and co-founder of Ripple, Christian Larsen and its current CEO, Brian Armstrong, had raised capital in order to gather funds for their venture. These funds had been raised via the offering of the XRP token, which is the native token of Ripple, and it had been offered to investors globally.
The offering had taken place back in 2013 when it was unregistered, as was XRP itself. Moreover, the company was also suspected of giving XRP tokens in exchange for services, such as labor. Allegations indicated that the former as well as the current CEO both had also made personal sales of the token in order to raise half a billion dollars. The SEC said that as per the rules outlined in the Federal Securities Law, the defendants had not registered their sales. The case has been ongoing since then.
How the Crypto Bill is Relevant
The crypto bill, which has been introduced by Senators Cynthia Lummis and Kristen Gillibrand, develops a regulatory framework for the crypto market. This is designed to prevent fraudulent activities in the crypto space. Two asset classes will be used for categorizing cryptocurrencies; commodities and securities. Every asset will be considered an ancillary one before it is categorized, which means that XRP would not come under the authority of the SEC.
Hence, this will automatically weaken the SEC’s case against XRP and will give investors more confidence about the future of the token. Furthermore, if Ripple decides to conduct an IPO, this could also turn things around in the company’s favor. Their developers’ team said that they would welcome a regulatory framework because it can offer a great opportunity for growth and would in investors who had not stepped in because of the lack of clarity in the markets.
Similar to the rest of the market, XRP’s price has remained bearish. It had come down to $0.386 and had been sticking to that level, not showing a lot of volatility. But, trends indicate that there can be a 25% movement in the price of the token, which can go either way. It could be a rise, if the company ends up winning the case.