When key crypto market players like Coinbase Global (NASDAQ: COIN) or Robinhood Markets get a lucky break, fintech coins such as XRP (CRYPTO: XRP) sometimes stand to benefit.
And recently, Coinbase had some particularly pressing issues play out precisely as it desired. There are likely some positive implications for XRP too, so let's dive in and explore what's happening here.
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This case just got dropped
On Feb. 21, the Securities and Exchange Commission (SEC) opted to drop its case against Coinbase, which alleged that it had been operating an unregistered securities exchange as a result of one of its cryptocurrency-related offerings to investors. The move means that the exchange will now be able to offer cryptocurrency staking without as much fear of further enforcement action.
The reason why this case being dropped is a positive sign for XRP is that Ripple, the company that issues XRP, is also facing down the SEC right now. Regulators claim that Ripple made an unregistered securities offering when it offered XRP for sale. If the lawsuit is dropped, it'll be a major catalyst for XRP, as it means that the odds of it getting de-listed from exchanges due to being legally suspect will fall sharply.
There's also another key regulatory question impacting XRP right now which could get resolved in its favor quite soon. Several asset managers have filed to offer exchange-traded funds (ETFs) holding XRP. If those ETFs are approved, it'll mark a big increase in the amount of the coin that's being bought and sold every day, as the issuers of the ETFs will need to buy and sell XRP to back their holdings, which they extend to investors.
As you probably know, XRP's investment thesis relies heavily on the fact that the chain generates a small portion of fees every time there's a transaction. Those fees accrue value to the coin, as they fund tech development as well as business development to onboard more high-value users, like financial institutions. So an ETF approval would almost certainly drive the price of the coin up. When paired with the potential dropping of the SEC's action against Ripple, this might make for a mighty catalyst cocktail this year.
Could other cases also get dropped soon?
With the regulatory winds shifting to become tailwinds rather than headwinds, Coinbase isn't the only exchange that's benefiting, which has positive implications for the case with XRP as well.
For instance, as of Feb. 21, the SEC dropped its case against Robinhood's crypto platform. Again, this contributes to the trend of regulators stepping back rather than stepping in. Established fintech coins like XRP stand to gain the most, as they're already somewhat integrated into the traditional financial system.
There are only so many confirmations that regulators can give that they're taking a more pro-cryptocurrency industry stance than before. Soon enough, XRP and other serious crypto assets won't have any remaining barriers to widespread adoption, even among the most conservative of their target users. While technically it isn't guaranteed that the SEC will give Ripple the green light like it did with Coinbase and Robinhood, it's becoming increasingly hard to see any other conclusion, especially considering that the SEC's cryptocurrency enforcement unit was recently disbanded.
So should investors use this as an opportunity to load up on XRP?
If you're already a believer in the investment thesis for buying the coin, it might be a good idea to commit a bit more capital based on the regulatory threat that's likely to ebb away soon. There won't be too many more opportunities like this in the big scheme of things, but it's important to note that there's no real rush to accumulate this coin either, given its inherent strength and long-term value drivers.
But for anyone who wasn't already on the fence, these regulatory catalysts are distinct from the primary ways that the coin generates value over time. If the idea of buying a volatile cryptocurrency wasn't appealing before, it probably shouldn't be much more appealing to you now.
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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Coinbase Global and 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.
