Ripple's Refocus on US Crypto Market Suggests Less Hostile Regulatory Environment

Ripple's relationship with the SEC has been the Achilles heel of the crypto industry in the US. Dating back to a 2020 lawsuit, the SEC had accused Ripple of conducting an unregistered securities offering worth $1.3 billion by selling XRP. 

Whilst Ripple's court case is specific to the company, the regulator's accusation underpins the entire industry's operations as it battles to redefine how a cryptocurrency is classified.

Until now, the ongoing lawsuit has discouraged Ripple from expanding on American territory.

As recently as September 2023, Ripple revealed that more than 80% of its hiring was outside the US.

"In jurisdictions such as Singapore, Hong Kong, the UK and Dubai, “governments are partnering with the industry and you’re seeing leadership, they’re providing clear rules and you’re seeing growth”, Ripple’s chief executive officer Brad Garlinghouse said at the time.

In a post on LinkedIn, Ripple's Senior Director, W. Oliver Segovia, said that 90% of its business is conducted outside the US.

However, Segovia added that Ripple will announce product updates driven by its money transmitter licenses (MTLs) that "cover the majority of the US states."

To set things in motion, Ripple will organize a fintech meetup on 7 February at its new San Francisco headquarters, featuring heads of product Brendan Berry and Pegah Soltani, CTO David Schwartz, and US MD Joanie Xie.

Ripple's decision to operate more in the US suggests its comfort levels in the region have increased, perhaps on the back of more accommodating regulators.

2024 kicked off with the SEC's approval of Bitcoin ETFs, which strengthens the confidence that regulators are adhering more to the needs of the crypto market.

XRP ETF?

Since the SEC's approval of Bitcoin ETFs, chatter surrounding potential XRP ETFs has arisen.

Last month, Steve McClurg, Chief Investment Officer at Valkyrie, hinted at the possibility of an Ethereum and Ripple ETF.

 “I think we’re going to see a lot of filings come out for Ethereum," he said. "I even think we might see something for Ripple given the recent progress.”

Andos Finance co-founder also chimed in on X, declaring, “An XRP ETF is only a matter of time.”

Grayscale also re-included XRP in its Grayscale Digital Large Cap (GDLC) Fund last week.

"Grayscale has adjusted GDLC’s portfolio by selling certain amounts of the existing Fund Components in proportion to their respective weightings and using the cash proceeds to purchase Avalanche (AVAX) and XRP. As a result of the rebalancing, Polygon (MATIC) has been removed from GDLC," the firm said in a statement.

Grayscale's Bitcoin ETF was one of the eleven approved by the SEC last week. However, the fund has seen outflows totalling about $579 million compared to the other Bitcoin ETFs, which have pulled in a total of nearly $1.4 billion.