Kelvin Daminabo
After a recent court ruling, Ripple faces a mixed bag of outcomes. The imposed $125 million penalty is considerably lower than the SEC’s initial demand of $2 billion. However, the court’s injunction presents a significant hurdle for Ripple’s future endeavors.
Challenges in Adoption
The injunction mandates that US entities acquire XRP tokens from the market instead of directly from Ripple. This complicates the adoption of Ripple’s On-Demand Liquidity (ODL) solution in the US. Matt Rosendin, the founder of CapSign, points out that this restriction could impede Ripple’s growth in the US market.
Exemptions and Constraints
While Ripple can still sell XRP tokens to institutions under federal securities exemptions, the options are limited. For instance, under Regulation A, XRP sales for ODL are capped at $75 million annually. This limitation severely impacts Ripple’s ability to scale its ODL offering within the US.
Potential Appeal
Despite the relatively lower penalty, Ripple is contemplating an appeal. The company might argue that the injunction unfairly restricts its operations and inhibits ODL adoption. However, the appeals process is expected to be prolonged, with a higher court decision unlikely to come this year.
Future Actions by the SEC
The SEC might opt to challenge the ruling regarding the classification of secondary XRP sales as non-securities. If successful, this could have widespread implications for the entire cryptocurrency sector. For now, Ripple must maneuver through intricate regulatory frameworks and exemptions to ensure its sustainability and expansion in the US market.