US SEC Claims XRP Rides on Speculation

A recent remark from the U.S. Securities and Exchange Commission (SEC) could influence people’s perceptions of XRP, the digital currency associated with Ripple.

A document shared by Anderson, a well-known figure in the XRP community, shows that the SEC recognizes the importance of speculation in setting the cost and use of XRP. The document, a part of the SEC v. Ripple litigation, suggests that speculation appears to be a fundamental factor underlying XRP’s valuation rather than having a short-term impact on the price.

One of the key elements in the SEC’s argument is an email from Ripple CEO, Brad Garlinghouse, sent in April 2017. In the email, Garlinghouse notes that the company has benefited greatly from the recent spike in speculative activity surrounding XRP and its price increase.

The speculative market, according to Garlinghouse, was essential in creating the liquidity needed for XRP to be integrated into Ripple’s products, including its On-Demand Liquidity (ODL) services. Simply put, both the SEC and Garlinghouse imply that speculation is the driving force behind XRP’s ability to generate the volume required for it to be used effectively in cross-border payments.

This idea suggests that speculation isn’t only an added factor but is also a core part of XRP’s operation. However, this reliance on speculation could also be seen as a potential weakness for XRP. If its utility is tied too closely to speculative market dynamics, it raises concerns about the company’s long-term economic model’s stability.

According to some analysts, XRP’s high reliance on speculation may make it susceptible to the ups and downs of the cryptocurrency market. Liquidity problems could arise for XRP during times of low speculative interest, which would impair its integration with ODL and other essential Ripple services. As a result, there may be more room for substitutes like the stablecoin RLUSD, which some members of the XRP community have already suggested.

Nevertheless, Ripple has consistently denied any plans to replace XRP with a stablecoin in their payment solutions. Garlinghouse’s comments, referenced by the SEC, suggest the opposite  —that speculation plays a valuable role in supporting XRP’s use within Ripple’s products, despite any lingering concerns.

As the deadline for the next phase in the lawsuit approaches, XRP’s price has remained steady at around $0.59, with lower transaction volumes compared to previous highs. This inaction is a reflection of the uncertainty surrounding the case’s verdict. The value of XRP may suffer if Ripple loses its allure, and its position in the cryptocurrency market may be called into question.

Still, some analysts maintain their optimism. They argue that if Ripple gets a favorable outcome or avoids an appeal, XRP could see a sharp price increase, once again driven by speculation.

The crypto industry and entities such as BiFuFu Inc. (NASDAQ: FUFU) will await how this particular case concludes in order to assess the implications that the ruling may have on the broader industry.

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