Major Changes to Ripple’s XRP Sales Strategy
If you’ve been following Ripple, you’ll know they’ve recently made major adjustments to how they approach selling XRP to institutions, which was detailed in their quarterly report for Q4 2023. This decision stemmed from the crucial ruling on July 13, 2023, which determined that XRP does not qualify as a security. However, some of their previous sales to institutions were found to have violated securities regulations.
Ripple’s XRP Sales Game Plan decoded
Ripple had already started shaking things up with their XRP sales strategy even before the July court ruling. Now, all sales align with the legal standards set forth by the court. This change represents a significant shift in their sales practices.
Impact of Changed Model in the Case
Ripple’s latest report reveals a resurgence in spot trading volume for XRP during Q4, with an average daily volume of $600 million. Even though XRP underperformed compared to other major cryptocurrencies such as Bitcoin and Ethereum, it closed Q4 with a 19.5% increase.
Ripple had previously sold XRP directly to institutional buyers under written contracts, amounting to $729 million worth of XRP. The court deemed this as an investment contract. However, in the new model, buyers obtain XRP solely to facilitate quick, low-cost transactions, holding the asset briefly. As a result, the recent or current sales to institutions may not be subject to the same securities provisions as past transactions.
Likelihood of the SEC’s Motion to Compel
Ripple’s aim is to ensure that its XRP sales meet legal standards, given the latest developments in the SEC lawsuit. The SEC is looking to make a decision on a potential injunction based on Ripple’s financial records. In the remedies phase of the lawsuit, both parties will submit remedies-related briefs from March to April 2024, with the court ultimately deciding on appropriate remedies for Ripple’s violations.
Hot Take: Potential Implications
These significant changes in Ripple’s approach to selling XRP to institutions may mitigate further regulatory penalties or bans on its sales, allowing the firm to continue its current operations without future disruption.
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