There are already a plethora of reasons to consider buying and holding XRP (CRYPTO: XRP). But the changing of the guard in the U.S. political system might bring even more tailwinds than there were before.
In particular, three new developments could send the coin's price higher than ever over the coming few years. Let's consider each of the new tailwinds so you can assess whether it's worth an investment of $2,500 or more.
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1. Cryptocurrency is now a national priority
Per an executive order issued by the new presidential administration in the U.S., cryptocurrencies are now a national priority, and there may soon be a push to create a national cryptocurrency repository. XRP may be selected as one of the assets included in that repository and is considered a front-runner for that distinction by many in the industry. And both are good news for the coin. Even if the repository isn't formed, or if it doesn't include XRP, it's still a very positive sign that it's a reputable enough asset to even be in the running.
Obviously, the next important question is: How much buying pressure will the new regulatory environment ultimately create? On that front, it's hard to do much more than speculate. If a government-run repository is mandated to purchase billions in XRP, obviously, it'd be a powerful driver for higher prices, and it'd also become a new element of the investment thesis for the coin.
In a more likely scenario, the government would simply retain the coin for the long term if it came into possession of any tokens via asset seizures or forfeitures. That wouldn't create any buying pressure, but it would effectively reduce the number of coins in circulation, which could lead to higher prices by way of scarcity.
Keep your eyes open for new developments on this front, as the picture is evolving on a weekly basis.
2. A key government position just got filled with a pro-crypto individual
Having pro-crypto regulators should, in theory, create a more permissive environment for cryptocurrencies like XRP to grow, especially when those regulators are implanted in key positions.
On that note, Brian Quintenz has been nominated to lead the Commodity Futures Trading Commission (CFTC), an important regulatory entity that's adjacent to the Securities and Exchange Commission (SEC), and may become more important than the SEC with regard to regulating cryptocurrency specifically. Quintenz held the same role between 2017 and 2021 and was formerly employed in venture capital (VC), where he was a cryptocurrency policy lead. He also allegedly invests in crypto himself.
In total, it's hard to imagine a more bullish personnel pick for the sector. That's likely to have favorable implications for XRP, even if there haven't been any specific policies affecting it just yet.
3. Regulators look set to loosen their guidelines
As of late January, the SEC formed a new cryptocurrency task force that's dedicated to "developing a comprehensive and clear regulatory framework for crypto assets," per the organization's press release. The move is being interpreted in the crypto industry as a sign that the SEC's reliance on enforcement actions, widely considered to be a hallmark of the prior regulatory regime, is now coming to an end.
For XRP specifically, that could be very good news, as Ripple, the company that issues it, was previously sued by the SEC for making an unregistered securities offering of the coin.
It's also currently awaiting feedback from regulators regarding whether the coin can be included in exchange-traded funds (ETFs), so it has two different vectors of exposure to regulatory risk or upside here.
Nonetheless, there is no guarantee that the new regulatory approach is going to resolve 100% favorably for XRP across the board.
These are definitely tailwinds, but not decisive
It is likely that at least some of these tailwinds will benefit XRP. But if you're thinking about whether they are sufficient to justify a purchase of the coin with $2,500, you should probably take a step back.
Regulatory risk will continue to exist for XRP even if the new set of regulators are, on average, friendlier than the prior set. It's still exposed to risks from competition. Similarly, regulatory tailwinds won't directly increase the coin's adoption or its ability to generate fees from international money transfers.
In other words, there are many good reasons to buy this coin already. You could interpret the new regulations as ancillary reasons for bullish sentiment about the coin's future, but you should base your decision on the core investment thesis, not on ultimately external factors.
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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
