Key Insights, Major Changes Unveiled

In their Q4 report, Ripple Labs provided an extensive update on the performance of XRP and the company’s significant legal and regulatory strides, alongside insights into the evolving landscape of the crypto market. The document reveals a series of developments affecting Ripple, XRP, and the broader crypto ecosystem.

Crypto Market Performance

The report highlights a robust recovery in XRP’s trading volumes, which surged to $600 million daily in Q4, marking an increase of 75-100% from Q3 lows. This uptick aligns with the overall crypto market’s resurgence, with Bitcoin (BTC) and Ethereum (ETH) volumes climbing by 88% and 140% quarter-over-quarter, respectively.

Legal Milestones Against the SEC

Ripple celebrated a watershed 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 sales and distributions of XRP from being categorized as investment contracts.

This legal win 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 did find that some of the company’s institutional sales constituted investment contracts, necessitating registration with the SEC.

Currently, the company is preparing for the remedies phase. “Looking ahead, Ripple and the SEC will enter the ‘remedies’ phase of the case, focused on Institutional Sales. Legal briefs will be submitted in March and April of this year and then the Court will decide which remedies to impose,” the report states.

Major Change: Ripple Restructures Its XRP Sales

Following the court’s decision, Ripple has 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 found that certain historical XRP sales 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 prior to the Court’s July ruling, Ripple had changed the way it sold XRP and going forward 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 resources necessary 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 service provider by the Central Bank of Ireland. These licenses, alongside others in nearly 40 US jurisdictions, underscore the company’s commitment to regulatory compliance.

XRP Ledger Developments

The advancements within the XRPL ecosystem, including the commencement of the validator voting process for XLS-30, are thoroughly explored. The introduction of a non-custodial automated market maker (AMM) as a native feature of the XRPL’s decentralized exchange (DEX) is poised to enhance liquidity and market efficiency.

“The XRPL’s inherent advantages of low transaction fees and speed are leveraged through XLS-30, marking a significant step towards enhancing the ledger’s utility,” the report states, highlighting the ongoing commitment to technological innovation.

On-Chain Activity And NFT Growth

A surge 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 Q3, the ledger’s expanding footprint in digital asset and NFT markets is evident.

“The remarkable growth in NFT activities reflects the ledger’s capacity to support emerging use cases,” the report analyzes, pointing to the vibrant ecosystem developing around the XRPL.

XRP Holdings Update

Ripple concluded the report with an update on its XRP holdings, detailing both available and escrow-locked XRP. As of December 31, 2023, Ripple’s direct holdings slightly decreased, while the total escrow-locked XRP also saw a reduction. The total amount of XRP held by Ripple amounted to 5.077 billion XRP, and the aggregate amount of XRP in escrow amounted to 40.7 billion XRP.

At press time, XRP traded at $0.52184.

Featured image from FT, chart from TradingView.com