Cryptoassets registered strong gains this week, led by Ripple’s XRP. The token rallied by more than 70% after a highly anticipated US court decision. Put simply, a New York judge ruled that XRP is not necessarily a security, albeit with a caveat. Despite the case’s narrow focus on Ripple and XRP, the impact of the ruling might not be limited to the token alone. Instead, the decision is widely considered to be a supportive catalyst for the entire crypto ecosystem. Market participants extrapolated positive implications for Ethereum and other cryptoassets which the SEC has previously referred to as unregistered securities. Likewise, Coinbase shares were up more than 24% on optimism that the company could prevail in its own battle with the SEC. US stocks look set to end the week of a mixed note even though US banks set a positive tone at the start of the 2Q earnings season. In macroeconomic news, US June headline inflation and core inflation data came in at a lower-than-expected 3.0% and 4.8%, respectively, this week. While the Fed’s fight against inflation is not entirely over, many market participants project a likely 25 basis points rate increase on July 26 to be the last hike in the cycle – compared to the two hikes projected in the Fed’s dot plot.
Cryptoassets and crypto-related stocks rallied on Thursday on the back of a ruling by a federal judge in the Southern District of New York who issued a partial summary judgment in the long-standing lawsuit between Ripple Labs and the US SEC. Ripple’s XRP token surged after judge Analisa Torres ruled that the cryptoasset is “not necessarily a security on its face.” The judgment clarified that XRP, as determined “is not in and of itself a ‘contract, transaction, or scheme’ that embodies the Howey requirements of an investment contract.” The court’s findings specified that the automated sales of Ripple’s XRP token, which involve public buyers conducting transactions on digital asset exchanges, do not meet the criteria for being classified as investment contracts.
The decision potentially has far-reaching implications for the US crypto industry and beyond. By ruling that XRP per se is not a security, US companies and investors could get more clarity on what constitutes a security, suggesting that several other tokens that the SEC listed as securities could also be non-securities. It also means that the SEC might have to revise its approach on several of their ongoing cases that revolve around cryptoassets as unregistered securities. However, sales to select institutional buyers were deemed investment contracts in the court decision due to the expectation that these investors may profit from Ripple’s efforts. Conversely, distributions of XRP to employees as compensation or to third-party developers for network application development do not fulfill the conditions outlined in the Howey Test, as they are not categorized as monetary investments. For particularly noteworthy takes on the ruling, please refer to comments by Coinbase’s chief legal officer Paul Grewal and Ripple’s chief legal officer Steve Alderoty.
Although the judge’s decision did not relate to secondary sales of XRP, exchanges are now signaling greater confidence in trading XRP. On the same day, Coinbase tweeted that it will restart XRP trading on its crypto exchange. Other major crypto platforms including Kraken, Bitstamp and Crypto.com followed suit in relisting the tokens. In addition to its price rally, XRP witnessed a remarkable surge in trading volume on Thursday, following the federal court ruling. According to data from CoinGecko, the 24-hour trading volumes surged, jumping from $613 million to more than $11 billion between July 13 and 14, representing an 18x increase within a single day.
Market Overview
The global cryptoasset market capitalization currently amounts to $1.25 trillion – up from the $1.21 trillion one week ago, with bitcoin accounting for 47%. Among the Top 30 cryptoassets by market cap, XRP outperformed, gaining almost 50% over the week. The price of bitcoin (BTC) decreased slightly by 0.2% to $30,139 and the price of ether (ETH) rose by 3% to $1,916. The total value locked (TVL) in DeFi is sitting at roughly $44.6 billion – with Ethereum (excluding Layer 2s) accounting for about 59% of TVL.
This Week’s Headlines
- Blockchain Association demands probe into SEC approval of Prometheum
- Cboe reaches surveillance agreement with Coinbase for spot bitcoin ETFs
- BlackRock CEO Larry Fink: crypto will “transcend any one currency”
- The Bitcoin network’s mining difficulty rises by 6.45% to a new all time high
- Polygon proposes upgrading MATIC tokens to become POL
- Dapper Labs lays off 51 employees after previously cutting 20% and 22% of employees in February and November, respectively
- Digitex CEO ordered to pay more than $15 million over CFTC charges
- Arbitrum-based Rodeo Finance loses $888,000 in DeFi exploit
- Microsoft partners with Axelar on blockchain interoperability solutions
- Arkham CEO defends “dox-to-earn” program, says identifying bad actors is “the whole point”
- Google Play allows users to earn crypto assets in apps and games
Notable Deals and Fundraising
- Web3 music firm Sound raises $20 million from a16z crypto, Snoop Dogg and other investors
- Swiss Web3 gaming startup Xterio raises $15 million from Binance Labs
- Web3 social media analytics firm LunarCrush raises $5 million Series A round co-led by Draper Round Table
- Narval raises $4 million for platform that helps firms organize Web3 assets
