XRP (CRYPTO: XRP) seems to continuously have doors opened for it recently. Each time there is a new positive catalyst, it paves the way for this currency to continue to rise in the coming years. There are three fairly recent developments that make XRP worth buying and holding for at least three years. Let’s examine each development and put them into context.
1. Legal Troubles May Have Come To An End
The Securities and Exchange Commission (SEC) has been in a legal battle with Ripple, the company developing XRP, since late 2020. The controversial issue is whether Ripple violated securities laws by offering XRP without filing related paperwork with the regulators. That battle is now coming to an end, and it seems that XRP has convincingly won.
The SEC and Ripple jointly filed a motion on May 8, seeking to resolve the SEC's lawsuit for a total of $50 million, down from the previously agreed amount of $125 million. This motion is currently under consideration by the judge. If the judge approves, Ripple will recover $75 million from the previously planned settlement agreement.
More importantly, it will be free to continue issuing and developing XRP without fear of regulatory authorities shutting down operations and rendering this currency worthless. Thus, perhaps the biggest risk this currency faces is now -- almost -- in the rearview mirror, which is another reason to buy it.
2. A Major Acquisition Has Just Been Greenlit
On April 8, Ripple paid about $1.2 billion to acquire a company called Hidden Road, a type of business known as a prime broker. Prime brokers provide services to other financial companies, allowing them to borrow money and execute their transactions, among other things.
Now, since Ripple owns Hidden Road, certain stablecoins on the XRP ledger may be used as collateral for institutional investors such as hedge funds using Hidden Road's platform. Importantly, those stablecoins can now be used as collateral to borrow in both the cryptocurrency and traditional finance sectors, meaning they are akin to a financial bridge between these two areas. Another benefit is that all post-trade activities that Hidden Road provides for its clients will be transferred to the XRP ledger, creating significant volume for the chain, as well as a larger on-chain capital supply.
Summarizing these benefits, XRP will now undeniably participate in the financial system of a system that institutional investors actually use to achieve their goals. It is additional marketing for them to adopt XRP to save on their costs, and newly held capital on-chain is likely to also increase its value. Over time, the price effect could be significant.
3. Perhaps It Will Soon Be Held By The U.S. Government
As you may have heard, there has recently been an executive order in the United States requiring the creation of a Digital Asset Reserve (DAS). Although that reserve has not yet been implemented, if it does, XRP will be included. This means that the U.S. government will be holding this currency for the long term, if not necessarily buying it on the market.
Under the proposed DAS, the U.S. government will retain seized digital assets, including XRP, instead of selling them. Therefore, there will not be much floating supply of XRP, as the retained assets are likely to be held in DAS permanently or at least until another administration changes policy. With a lower circulating supply, buyers will need to compete to secure the remaining pieces of the pie, potentially driving prices higher over the years at a slightly faster pace than usual.
Another upward price direction of XRP being included in DAS is that it signals the government believes it is valuable enough to hold. Combined with other management catalysts and the use of this currency by players in the traditional financial sector, it is gaining a lot of credibility as an asset, and that could also help it regain value.