Ripple Labs is in talks with the U.S. Securities and Exchange Commission (SEC) over a possible settlement regarding the status of its cryptocurrency, XRP. The news follows Ripple also being granted a Dubai Financial Services Authority (DFSA) license, which will allow the firm to offer crypto payment services in the UAE.
Ripple Enters Negotiation Phase with SEC
Recent reports indicate that the negotiations between Ripple and the SEC have revolved around the issue of whether XRP is a security or a commodity.
It has been uncomfortable since December 2020 when the SEC initially sued Ripple for selling XRP in an unregistered sale of securities. SEC investigation, according to Fox Business journalist Charles Gasparino, involves using XRP against Ethereum, which is already a commodity with priority.
Gasparino continued to detail the SEC’s interest as, “What’s under discussion now is the distinction between the two cryptos.” He added that if XRP can demonstrate predominant trading as a commodity, it might escape the regulatory challenges that Ripple has faced since the lawsuit began.
Proposal for XRP as a U.S. Strategic Reserve Asset
In a subsequent development, the U.S. government proposed using XRP as a strategic financial tool. The proposal was made to the SEC by Maximilian Staudinger and focuses on the advantages of implementing XRP into the U.S. banking system.
The proposal claims that XRP could unlock substantial capital trapped in cross-border Nostro accounts, estimated at $27 trillion, with $5 trillion held by U.S. banks.
The plan is optimistic that America can free up $1.5 trillion of capital with the assistance of XRP, lowering the cost of transactions and improving liquidity. The plan does have some over-reach in proposals, like the purchase of 25 million Bitcoin, but one cannot help but question whether the plan is possible or not.
Ripple Expands to the UA
Ripple’s new DFSA license is its first Middle Eastern regulatory approval. The license will allow Ripple to support cross-border crypto payments in Dubai, a core financial center of around $400 billion. Ripple CEO Brad Garlinghouse was positive about the UAE’s tech and cryptocurrency innovation-friendly business environment, with the nation promising to be able to unlock Ripple’s potential.
DFSA’s Crypto Token Regulatory Framework 2021 has paved the way for such companies, and Ripple’s move is towards the vision of Dubai on having a regulated universe of cryptos. The approval is timely as the current SEC talks could result in resolving Ripple’s legal woes quite soon.
Community Reaction and Market Impact
The XRP community welcomed the SEC settlement negotiations and Ripple’s moves into the UAE with open arms. Traders in the market believe that XRP’s future hinges on regulatory clarity. If authorities classify XRP as a commodity, removing regulatory barriers could lead to wider usage. At the time of writing, the price of XRP stands at $2.32, up 2.9% this week.
Subsequently, the longer the negotiations last, the more the majority believes that Ripple’s negotiation result will have long-term impacts on the future of XRP and possibly even open the door to regulating cryptocurrencies in the United States. Investors and supporters are all waiting anxiously for news.
