In 2012, financial technology company Ripple introduced a digital payments network built on the blockchain known as the XRP Ledger. The native digital asset XRP (XRP 4.52%) functions as a bridge currency to provide banks and payment service providers with access to fast, cheap cross-border transactions.

Since its introduction, the Ripple payments network has expanded to include more than 80 markets and 100 financial institutions. Yet, while the company has facilitated transactions totaling more than $70 billion, it has hardly scratched its opportunity to disrupt international payments. The European Central Bank estimates cross-border volume will hit $290 trillion by 2030.

With that in mind, XRP is currently the third-largest cryptocurrency with a market value of $143 billion. But that figure could soar in 2025 when (and if) its "Bitcoin moment" arrives. 

XRP could soar following the approval of spot exchange-traded funds (ETFs)

In January 2024, the Securities and Exchange Commission (SEC) approved the creation of spot Bitcoin ETFs. Those funds reduce friction for prospective investors by providing a form of Bitcoin exposure free from the complexities and high fees associated with cryptocurrency exchanges.

Spot Bitcoin ETFs during their first year on the market attracted $37 billion in net inflows, which makes their introduction one of the most successful financial product launches in history. And the iShares Bitcoin Trust was the single most successful ETF as measured by net inflows during its first year, according to The Wall Street Journal.

Bitcoin's price has more than doubled in the 13 months since spot Bitcoin ETFs won regulatory approval, and XRP may have a similar "Bitcoin moment" in 2025. At least four asset managers have requested permission to create spot XRP ETFs, including 21Shares, Bitwise, Canary Capital, and WisdomTree. If the SEC approves the applications, XRP could be a huge winner this year.

Image source: Getty Images.

History says XRP could soar when its legal battle with the SEC is resolved

XRP has another potential catalyst on the horizon. Ripple has been embroiled in a legal battle with the SEC since 2020, but history suggests any remotely positive resolution could send XRP higher. Details concerning the lawsuit include:

• December 2020: The SEC charged Ripple with selling XRP tokens as unregistered securities to retail and institutional investors. To elaborate, any financial asset defined as a security is subject to regulatory oversight by the SEC. The agency argued Ripple violated the law by not registering XRP as a security.
• July 2023: U.S. District Court Judge Analisa Torres handed down a split ruling. Specifically, she said the $757 million in XRP tokens sold through digital exchanges to retail investors did not meet the definition of securities transactions, but the $728 million in XRP tokens sold directly to institutional investors were indeed securities.
• August 2024: U.S. District Court Judge Analisa Torres told Ripple to pay a $125 million fine for selling XRP as an unregistered security to institutional investors. That penalty was much less severe than the $2 billion the SEC wanted, but more severe than the $10 million Ripple proposed.
• October 2024: The SEC appealed the split decision handed down by District Judge Torres. "We believe that the district court decision in the Ripple matter conflicts with decades of Supreme Court precedent and securities law, and look forward to making our case to the Second Circuit," said an SEC spokesperson.
• January 2025: The SEC filed its opening brief with the appeals court, citing its belief that XRP sold on digital exchanges violated the law. Additionally, the SEC disputed Torres' decision to exempt about $600 million in noncash transactions in which Ripple exchanged XRP for services like labor. Ripple plans to file its opening brief by April 16, 2025.

Some industry experts think the SEC may drop its case against Ripple. Since the departure of former Chair Gary Gensler, the agency has created a task force that aims to "draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously."

The press release announcing the task force acknowledged that the SEC has relied on enforcement rather than clearly defined rules to "regulate cryptocurrency retroactively, often adopting novel and untested legal interpretations along the way." The statement also made a promise to the cryptocurrency industry: "The SEC can do better."

Of course, there is no guarantee the SEC drops the lawsuit, but any resolution that does not permanently damage Ripple would likely send XRP higher. Its price soared more than 70% during the week following the July 2023 ruling from Judge Torres. Also, resolution of the lawsuit would make the approval of spot XRP ETFs more likely.