In its fourth quarter report, Ripple Labs provided an extensive update on the performance of XRP and the company's important legal and regulatory developments, along with information on the changing landscape of the crypto market. The document reveals a number of developments affecting Ripple, XRP, and the broader crypto ecosystem.
crypto Market Performance
The report highlights a strong recovery in XRP trading volumes, which increased to $600 million daily in Q4, marking a 75-100% increase from Q3 lows. This rally aligns with the overall crypto market resurgence, with bitcoin (btc) and ethereum (eth) volumes rising 88% and 140% quarter over quarter, respectively.
Legal milestones against the SEC
Ripple celebrated a breakthrough year with notable victories over the US Securities and Exchange Commission (SEC). On July 13, a pivotal court ruling established that XRP is not a security under federal law, exempting most of Ripple's XRP sales and distributions from being categorized as investment contracts.
This legal victory not only vindicates Ripple but also sets a precedent for the crypto industry, clarifying the regulatory status of tokens in the US. However, the court found that some of the company's institutional sales constituted investment contracts, which required registration with the SEC.
The company is currently preparing for the remedy phase. “Going forward, Ripple and the SEC will enter the 'remedies' phase of the case, focused on Institutional Sales. The legal briefs will be presented in March and April of this year and then the Court will decide what remedies to impose,” the report states.
Major change: Ripple restructures its XRP sales
Following the court's decision, Ripple adjusted its XRP sales strategy to comply with legal standards. The company emphasizes its dedication to leading the industry in transparency, ethics and compliance, adapting to evolving legal landscapes.
Ripple acknowledges in its report “that the Court determined that certain historical sales of XRP that the company made to sophisticated entities (institutional sales) were investment contracts and therefore should have been registered with the SEC.” Meanwhile, the fintech has already taken steps to make significant changes to its XRP sales:
Even before the court ruling in July, Ripple had changed the way it sold XRP and in the future we will ensure that Ripple's sales conform to the legal standards articulated by the court. Ripple will continue to raise the bar on compliance, ethics and transparency and invest the necessary resources to ensure compliance with the law as it continues to evolve in this space.
Regulatory and licensing achievements
Ripple's regulatory framework has been strengthened through significant licensing achievements, including a full Major Payments Institution license from the Monetary Authority of Singapore and registration as a virtual asset services provider by the Central Bank of Ireland . These licenses, along with others in nearly 40 U.S. jurisdictions, underscore the company's commitment to regulatory compliance.
XRP Ledger Developments
Advances within the XRPL ecosystem are explored in depth, including the start of the validator voting process for XLS-30. The introduction of a non-custodial automated market maker (AMM) as a native feature of the XRPL decentralized exchange (DEX) is set to improve market liquidity and efficiency.
“XRPL's inherent advantages of low transaction fees and speed are leveraged through XLS-30, marking a significant step towards improving ledger utility,” the report states, highlighting the continued commitment to innovation technological.
On-chain activity and nft growth
An increase in on-chain transactions and nft minting and sales underscores the growing utility and adoption of the XRP Ledger. With a 34% increase in transactions and over 400% increase in nft minting compared to the third quarter, the ledger's expanding footprint in the digital asset and nft markets is evident.
“The notable growth of nft activities reflects the ledger’s ability to support emerging use cases,” the report analyzes, noting the vibrant ecosystem developing around XRPL.
XRP Holdings Update
Ripple concluded the report with an update on its XRP holdings, detailing both available XRP and those locked in escrow. As of December 31, 2023, Ripple's direct holdings decreased slightly, while the total XRP locked in escrow also saw a reduction. The total amount of XRP held by Ripple amounted to 5.077 billion XRP, and the total amount of XRP held in escrow amounted to 40.7 billion XRP.
At press time, XRP was trading at $0.52184.
Featured image from FT, chart from TradingView.com
