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Ripple stablecoin unlikely to invite legal trouble with SEC, XRP loses key support

|ByEkta Mourya

  • Ripple stablecoin RLUSD will be launched with a compliance first approach, unlikely to face legal trouble, says SVP. 
  • Markus Infanger of Ripple says stablecoin aims to capture market share, expected to grow bigger in the coming years. 
  • SEC vs. Ripple lawsuit remains unresolved, XRP traders await settlement. 
  • XRP hovers around $0.60 after losing key psychological support on Tuesday. 

Ripple (XRP), the native token of the XRP Ledger slipped under $0.60, a key psychological support for the altcoin. The two key market movers are the Securities & Exchange Commission’s (SEC) lawsuit against Ripple and the upcoming stablecoin RealUSD (RLUSD).

XRP trades at $0.5956 at the time of writing. 

Daily digest market movers: Ripple stablecoin unlikely to face legal issues from the SEC

  • Ripple stablecoin RLUSD is scheduled to launch towards the end of 2024, per the payment firm’s announcement. 
  • Markus Infanger, SVP of RippleX, commented on Ripple’s stablecoin and whether the asset could face legal woes with the SEC. 
  • Infanger believes it is unlikely that RLUSD will face legal concerns with the SEC, since the payment remittance firm has taken a compliance first approach to the stablecoin. 
  • Infanger slammed the SEC for “stifling innovation” in the US, in his interview with the Thinking Crypto YouTube channel. 
  • The SEC vs. Ripple lawsuit awaits a final ruling. XRP traders await settlement in the legal battle between the regulator and the cross-border remittance firm. 
  • The news of a closed-door meeting at the SEC has sparked rumors of settlement, the meeting is scheduled for July 25. 
  • XRP traders have their eyes peeled for signs of a resolution in the Ripple lawsuit, since it could have a longstanding impact on cryptocurrencies. 

Technical analysis: XRP loses key psychological support

Ripple price is currently in an upward trend that started on July 8. The altcoin trades at $0.5963, after Ripple lost psychological support at $0.60. XRP could pullback to the 50% Fibonacci level of the decline from the March 11 top of $0.7440 and the July 5 low of $0.3423, at $0.5632. 

XRP could find support in the Fair Value Gap (FVG) between $0.5404 and $0.5783, as seen in the XRP/USDT daily chart. 

XRP could sweep liquidity at $0.5632 and attempt a comeback above psychological support at $0.60, to thenrally to $0.6666, the 78.6% Fibonacci retracement level. 

XRP/USDT daily chart

A daily candlestick close above $0.60 could invalidate the bearish thesis. 

SEC vs Ripple lawsuit FAQs

It depends on the transaction, according to a court ruling released on July 14: For institutional investors or over-the-counter sales, XRP is a security. For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.

The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token. While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and will need to keep litigating over the around $729 million it received under written contracts.

The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at. Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say. Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales are likely to persist.

The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation. While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.

The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before then. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.

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