The cryptocurrency world underwent a rollercoaster ride as the price of XRP soared a remarkable 28% in a span of just 90 minutes. Keeping the suspense of the cryptomarket intact, the surge emerged as the highest among the ruling cryptocurrencies according to market capitalization. This precipitous climb rode on the back of a ruling by the New York Court which declared that the selling of this digital coin on exchanges can’t be categorized under the definition of investment contracts.
The high stakes judgment proved to be a windfall for XRP as it reached an exalted standing of 64.7 cents, a vantage not visited since May 2022. While these numbers have induced a collective gasp among the crypto aficionados, the coin did eventually level out at 60 cents at the time of this article.
The cause behind the mercurial rise becomes transparent when examining the ruling from the District Court for the Southern District of New York. The court clearly specified that the transactions afoot on digital asset exchanges involving XRP can’t be treated as offers and sales of investment contracts. This was essentially due to the reason that no documents or evidence could be produced to ascertain the third prong of Howey test.
To the uninitiated, the Howey Test is a legal principle used for determining whether certain transactions can qualify as “investment contracts”. If so, then under the U.S Securities law, such transactions are subjected to certain regulations. The absence of the capability to meet the third prong, the XRP transactions remained free of the investment contract labeling and consequently, the accompanying regulations.
One of the victims of this wild ride was Uphold, a well-known name in the crypto exchanges where the ravenous investors can purchase XRP. In an unfortunate turn of events, Uphold experienced challenges in meeting the soaring demand, which coursed through its virtual veins after the court ruling. Expressing its regret on Twitter, the exchange revealed intermittent issues cropping up due to the considerable demand surge.
This equilibrium disrupter, although spectacular, is not free of scepticism. While it has painted a rosy picture for the short-term for XRP, one must cautiously tread the crypto landscape. As the old adage goes – not everything that glitters is gold. Similarly, while the court ruling brought a pleasant windfall, the inherent uncertainties of crypto markets, regulatory ambiguities and potential reactions from other legal jurisdictions keep the future of XRP shrouded in the fog of uncertainty.
Source: Coindesk
