XRP (Ripple) Investors Just Received Incredible News From the Securities and Exchange Commission

Ripple is the creator of the Ripple Payments network, which allows banks to make instant, low-cost international transfers. The company also created the XRP (CRYPTO: XRP) cryptocurrency to standardize those transactions.

In 2020, the U.S. Securities and Exchange Commission (SEC) sued Ripple, arguing that XRP should be classified as a financial security. This would have placed strict regulations on how Ripple issues the cryptocurrency to institutions, thus severely disrupting its business. The lawsuit suppressed the price of XRP for years, until Ripple and the SEC reached a settlement in August 2025, which sent the token soaring to a new record high.

XRP has since declined by around 60% from its peak amid the recent sell-off in the broader crypto markets. However, on March 17, the SEC delivered more good news for the token, which could set the stage for another rally.

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Ripple's regulatory win

Global payment infrastructure is quite fragmented. Some banks use the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network. Others don't, so they have to use intermediaries (middlemen) to transfer money to one another, which adds time and costs to the process. Ripple Payments solves that problem by sitting on top of existing infrastructure, allowing banks to settle transactions with one another directly, and instantaneously.

Ripple created XRP to standardize those transfers. For example, a French bank can send XRP to a Japanese bank instead of sending euros, eliminating costly foreign exchange fees. An XRP-based transfer can cost as little as 0.00001 tokens, which is a fraction of one U.S. cent.

XRP is completely different from other major cryptocurrencies in one important way. Bitcoin, for instance, isn't issued by a company -- it's obtained through a process called "mining," which involves using computers to solve complex mathematical problems in order to validate transactions on the blockchain (its system of record). Therefore, Bitcoin is completely decentralized, so nobody can control it or manipulate its supply.

Ripple's ability to issue XRP to institutions is central to its business model, but that also means the token's fate is very much tied to the company, hence why it plummeted when the SEC sued Ripple. The regulator believed the token should be classified as a financial security, just like other instruments issued by companies (including stocks and bonds). This would have placed a costly compliance burden on Ripple, and in some cases, it would have prevented the company from issuing XRP at all.

The SEC agreed to drop the case and any outstanding appeals last August, as part of the Trump administration's pro-crypto policy agenda, which is designed to foster innovation across the industry. More recently, on March 17, the regulator officially recognized XRP as a digital commodity, which has an entirely separate definition from a security. Therefore, Ripple is unlikely to face further regulatory headaches (at least not from the current administration).

Will XRP soar to new highs from here?

As I mentioned, XRP is down by more than 60% from last year's record high. It didn't register much of a reaction after the SEC officially recognized it as a digital commodity earlier this month, partly because the decision was fully expected. While XRP is certainly falling in lock-step with the rest of the crypto market, some of its downside might also be explained by the following structural issues.

First, banks don't have to use XRP to benefit from instant cross-border transactions through Ripple Payments, because the network also supports the use of fiat currencies. Moreover, Ripple launched its own stablecoin called Ripple USD (CRYPTO: RLUSD) in 2024. As their name implies, stablecoins are designed to maintain a steady value, so they experience practically no volatility. This means they are much better suited for making payments than traditional cryptocurrencies.

Therefore, even if Ripple Payments achieves mass adoption, it won't necessarily increase the value of XRP, because there is no guarantee that banks will use the token.

Second, bridge currencies like XRP aren't designed to be held long-term. In my earlier example, the French bank sending XRP overseas would be a buyer of the token, but the Japanese bank receiving XRP would be an equal seller when it converts the tokens into its domestic currency (the yen), so it can carry on with its day-to-day business. As a result, this transaction wouldn't necessarily increase the value of XRP at all.

In reality, the value of XRP is very much tied to the whims of speculative investors, so it's very hard to predict when -- or even if -- the token will recover its recent losses.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.