Written by: Huo Huo
Since Trump won the US presidential election on November 5, a variety of cryptocurrencies led by Bitcoin have surged, with Ripple's XRP performing even more outstandingly. According to news on December 2, XRP surpassed Solana and Tether (USDT) to become the third-largest cryptocurrency by market capitalization, returning to levels before the SEC vs Ripple lawsuit in 2020.
Ripple was once considered a prominent partner for the blockchain technology adoption of numerous financial cryptocurrency institutions, a rare representative "footprint" of traditional "financial giants" participating in the digital gold, blockchain, and PayFi technology wave. So will Ripple this time be a "counterattack" from financial giants?
01 Development History
Ripple's founding history can be traced back to 2004 when it was initially created by developer Ryan Fugger as a payment platform called RipplePay. RipplePay aimed to enable individuals and businesses to make payments peer-to-peer without bank accounts. Ryan Fugger designed a trust-based credit system, allowing users to transact directly with each other or make cross-border payments based on mutual trust, eliminating the need for intermediaries in traditional banking systems, thus effectively reducing transaction costs.
In 2011, tech entrepreneurs Jed McCaleb and Chris Larsen took over RipplePay and decided to develop it into a blockchain-based payment system. Thus, in 2012, they founded OpenCoin to manage RipplePay, released the decentralized payment network protocol RippleNet based on the Ripple protocol, and the token XRP, and began promoting XRP as a "bridge currency" for cross-border payments. As the business grew, to better promote Ripple technology and payment network, in 2015, OpenCoin officially changed its name to Ripple Labs.
It is worth mentioning that Chris Larsen is a well-known serial entrepreneur from Silicon Valley; besides Ripple, he also founded E-Loan and Prosper, both of which achieved great success. Jed McCaleb is one of the co-founders of the early Bitcoin trading platform Mt. Gox. Although Mt. Gox later collapsed due to security flaws and funding issues, McCaleb's early experiences provided him with an in-depth understanding of the cryptocurrency market and allowed him to build a network and reputation within the industry. Although he later left Ripple, he played a crucial role in its early development, helping Ripple build its core technology and ecosystem. The current CEO, Bradley Garlinghouse, has held executive positions at large companies such as AOL and Yahoo!, and has rich experience in the fintech and blockchain fields.
With the background of its founders and early advantages, Ripple has received multiple rounds of investment support since its establishment, attracting participation from many well-known venture capital firms. Investors include Andreessen Horowitz, IDG Capital Partners, Valar Ventures, Lightspeed Venture Partners, and more. This investment has provided Ripple with ample funds to promote its technological research and market expansion.
In terms of market development, Ripple is not only targeting ordinary users but is more focused on cooperating with traditional financial institutions. By 2013, Ripple had gained partnerships not only with some small financial institutions but also with large financial institutions. By 2014, Ripple had officially partnered with multiple cross-border payment companies, including IDT Corporation and Earthport, and collaborated with numerous global banks and financial institutions (such as Western Union, Santander Bank in Spain, PNC, etc.), changing the traditional cross-border payment model, making global payments more efficient and transparent, and eliminating reliance on foreign exchange markets for cross-border payments.
It is particularly important to note that Ripple Labs has two products: one is the Ripple protocol, which we mentioned is used and adopted by many banking institutions, and the other is the cryptocurrency XRP. These two concepts are easily confused; people often mistakenly believe that banks are adopting the XRP asset on a large scale. In reality, the banks' adoption of the Ripple protocol is merely a payment and settlement solution that does not rely on the cryptocurrency XRP. When adopted, XRP is merely an optional asset. Overall, the Ripple protocol and XRP are compatible with each other but are independent.
In 2018, Sun Yuchen also became Ripple's ambassador in China, responsible for promoting Ripple and XRP in the Chinese market.
In 2014, Ripple's predecessor company OpenCoin was also named one of the "50 Smartest Companies in the World" by MIT Technology Review. Over time, Ripple has continuously strengthened its cooperation with global banks and payment institutions, gradually entering the mainstream financial circle, and this trend is also reflected in the price of XRP.
When XRP was first issued in 2012, its price was only a few cents. With the launch of the Ripple protocol and partnerships with some financial institutions, the price of XRP gradually rose from 2013 to 2014, peaking at around $0.10. By the end of 2017, driven by a bull market in the overall cryptocurrency market, XRP experienced its first significant surge, particularly in December 2017, when the price of XRP broke through $3, setting a new historical high and becoming the third-largest cryptocurrency by market capitalization at the time.
In 2018, as the market bubble burst, the price of XRP fell to around $0.50, entering a relatively stable period until the SEC filed a lawsuit against Ripple in 2020, accusing it of unregistered XRP as a security. This case attracted widespread attention and became a significant legal storm in the cryptocurrency industry, notably impacting the price of XRP and leading to declines.
Despite this, in 2021, as the overall market rebounded and some court victories were achieved, the price of XRP once recovered to around $1.80. Entering 2022, due to ongoing legal regulatory challenges and unstable market sentiment, the price of XRP remained below $0.50 for most of the time. By 2023, Ripple had again achieved partial victories in litigation, restoring market confidence in XRP, and the price rose to around $0.90.
However, influenced by market sentiment, Ripple's business expansion, and the progress of legal proceedings, the price of XRP stabilized between $0.70 and $1.00 before November 2024, far from its peak period.
After the rally in November, by the news on December 2, the market capitalization of XRP surpassed USDT, becoming the third-largest cryptocurrency by market capitalization, returning to levels before the SEC vs Ripple lawsuit. So what factors have revitalized interest in XRP?
1) Turning point in the Ripple vs SEC lawsuit
The rise of XRP is most directly attributed to key progress in Ripple's over four-year arduous lawsuit with the SEC.
Since the lawsuit between Ripple and the SEC began in 2020, it has been a major obstacle to the rise in the price of XRP. On December 22, 2020, the SEC officially filed a lawsuit against Ripple and its founders Bradley Garlinghouse and Christian A. Larsen, accusing Ripple and its founders of profiting approximately $1.38 billion through the sale of XRP, which is considered an unregistered security, violating federal securities registration requirements. Ripple maintains that its actions are lawful and continues to defend itself in the lawsuit. Despite the ongoing litigation, under pressure from the SEC, several major trading platforms such as Coinbase and Binance US announced the delisting of XRP trading during this period.
However, recent developments in the case and the market indicate that the Ripple case is likely to be resolved satisfactorily.
We know that SEC Chairman Gary Gensler's strict regulatory policies in recent years have put many cryptocurrency projects in difficulty, earning him the title of "crypto enemy." However, with the news that Gensler is set to resign in January 2025, market expectations for a more friendly regulatory environment have been ignited. More importantly, this also suggests that the long-standing legal dispute between Ripple and the SEC may finally see resolution.
According to Bitcoin.com on December 2, former CFTC Chairman Chris Giancarlo stated that under a cryptocurrency-friendly government leadership, the SEC may withdraw its lawsuit against Ripple. He believes that the Trump administration may shift towards more supportive policies for cryptocurrencies, and the SEC would re-examine its regulatory stance on cryptocurrency assets, including the classification of XRP. Giancarlo has also written legal analysis reports arguing that XRP should not be considered a security and has consistently advocated for increased regulatory transparency and a relaxed approach to digital assets.
Previously, The Washington Post reported that Trump's advisory team was evaluating several candidates, including some officials and financial executives who openly support the cryptocurrency industry. Notably, Chris Giancarlo is considered a strong candidate for the role of "crypto czar" in Trump's administration.
Undoubtedly, the market is anticipating that the new SEC leadership may adopt a more lenient and supportive stance toward the cryptocurrency industry, thus bringing new opportunities for XRP and other projects that have faced regulatory pressure. It is foreseeable that if the new chairman pushes for policy changes, Ripple's lawsuit may be settled or withdrawn, and the regulatory environment for the entire cryptocurrency industry could change. This would be a significant policy boon for projects like Ripple, Binance, and Coinbase that have been suppressed. Under this favorable influence, the price of XRP rebounded strongly, with a single-day increase of over 35%, reaching a new high in nearly three years.
2) The Trump administration's friendly attitude towards cryptocurrency development
With the conclusion of the 2024 US presidential election, Republican candidate Donald Trump has been elected as the next president. During the campaign, Trump promised to make the US the "global cryptocurrency capital" and strongly support the cryptocurrency industry, which can refer to previous articles: (Breaking: Trump wins, Bitcoin welcomes the friendliest US government). This news has brought great confidence to the market, initially driving the prices of cryptocurrency assets led by Bitcoin upward, prompting Bitcoin to aim for the $100,000 mark.
Moreover, on November 14, it was reported that President Trump hopes to eliminate all capital gains taxes on cryptocurrencies issued by US companies, which would make all profits obtained by ADA, ALGO, HBAR, and XRP completely tax-free, as their creators are all US companies.
It can be said that the improvement in the regulatory environment has become a major favorable factor for XRP to welcome a turnaround. With the overall market trend driving the price increases of mainstream cryptocurrencies such as Bitcoin and Ethereum, the cryptocurrency market has entered a new bull cycle. As one of the well-established cryptocurrencies by market capitalization, XRP has naturally become a focus of capital attention.
3) Ripple's own development potential
For decades, the global financial payment system has been dominated by traditional banks' settlement and payment methods. While these systems have advantages in terms of stability and security, with the acceleration of globalization and the booming development of e-commerce, traditional payment systems have gradually revealed many issues: high transaction fees, slow payment processing speeds, and the complexity and high costs of cross-border payments have become bottlenecks restricting global financial liquidity and market development.
The XRP launched by Ripple and the XRP Ledger (decentralized ledger) differ from Bitcoin and Ethereum, which rely on proof of work (PoW) or proof of stake (PoS). XRP uses the Ripple Protocol Consensus Algorithm (RPCA). This algorithm reaches consensus through a set of independent validating nodes, ensuring the fast and effective verification of transactions. This allows the XRP network to complete transaction verification in seconds, greatly increasing transaction speed and lowering costs, while XRP essentially serves as a bridge currency that can efficiently and cost-effectively exchange between different fiat currencies, providing a smoother path for global payments and cross-border settlements.
With its innovative technology architecture and unique business model, Ripple has become an important force driving the innovation of traditional financial payment systems and expanding the Web3 field. It has established deep partnerships with over 100 banks and financial institutions globally, including well-known institutions like Santander Bank and Mitsubishi Bank. These collaborations not only enhance Ripple's influence in the traditional financial sector but also provide XRP with more practical application scenarios. Additionally, Ripple collaborates with platforms like Archax to actively promote the tokenization of real-world assets (RWA), helping traditional financial assets smoothly enter the blockchain ecosystem. Furthermore, Ripple is also actively laying out in the "institutional-grade DeFi" sector, opening up new opportunities for further cooperation with financial institutions by collaborating with platforms like OpenEden to invest in tokenized government bonds and other projects.
Therefore, Ripple has practical value and demand in cross-border payments, liquidity management, and other fields.
Recently, asset management firms like 21Shares and Bitwise Asset Management have submitted proposals for XRP ETFs, further validating Ripple's strategic advantage in the fusion of Web3 and traditional finance.
Additionally, according to CoinDesk, Ripple Labs has invested $25 million into the cryptocurrency industry's Fairshake Political Action Committee (PAC) to compete for seats on the cryptocurrency advisory board that Trump plans to establish and to influence the 2026 US Congressional elections to promote a more favorable regulatory environment for cryptocurrencies. Ripple's move marks the company's beginning to leverage political means to attempt to reverse its legal predicament with the SEC through policy reform and secure a more favorable legal and regulatory environment for XRP.
According to a Fox Business report on November 30, the New York Department of Financial Services has hinted at approving Ripple's miraculous RLUSD stablecoin. If approved, Ripple will be able to legally offer RLUSD to the public.
There are also unverified reports that Elon Musk may heavily invest in Ripple and XRP, which could further amplify market excitement. However, this rumor remains speculative, but it may have contributed to the bullish momentum of XRP.
03 Risk Warning
Despite XRP's outstanding recent performance, its future trajectory still requires rational consideration.
1) Centralization issues
The initial token distribution of XRP is controversial. Of the total supply of 100 billion XRP, more than half is controlled by Ripple Labs.
Secondly, unlike fully decentralized blockchains such as Bitcoin and Ethereum, Ripple Labs plays a core role in the development, maintenance, and support of the XRP Ledger. This dependency means that the XRP Ledger is to some extent subject to Ripple Labs' decisions.
Additionally, Ripple Labs has established partnerships with many traditional financial institutions and central banks, which typically have a centralized structure.
2) Leverage bubble risk
The sharp rise of XRP has brought its price to the highest level since 2021. Analysts have warned that this rise could be "leverage-driven", with the open interest in XRP derivatives reaching record levels, advising investors to be cautious of potential volatility. Historical patterns indicate that a rapid increase in open interest often leads to sudden market corrections.
3) Confusion between the Ripple protocol and XRP
As mentioned earlier, many people completely confuse the large-scale adoption of the Ripple protocol by financial institutions with the large-scale adoption of XRP assets. The two are mutually compatible but independent; although the Ripple protocol creates a strong background for the XRP asset, confusing the two could lead to misjudgment in overall assessment.
04 Summary
As one of the pioneers in the blockchain field, XRP has focused on cross-border payment scenarios since its launch in 2012, being favored by financial institutions for its efficiency, low cost, and technological innovation. However, the growth path of XRP over the past 12 years has not been smooth; it faces pressures from market competition and has been frequently hindered by regulatory controversies. As a veteran in the cryptocurrency field, whether XRP can successfully carve out an innovative path going forward remains to be seen.
