No Ripple effect? Crypto sector still fears external factors despite win over SEC

Fallout from trade wars and stock market anxiety are top concerns

The value of XRP, the cryptocurrency of Ripple Labs, soared about 10 per cent after news of the SEC lawsuit being dropped, but its run cooled down shortly thereafter. Reuters

The victory of cryptocurrency major Ripple over a US lawsuit may have proven its "grit" in the face of legal turmoil but it apparently isn't enough to calm nerves in a highly volatile market.

The US Securities and Exchange Commission eventually decided to back down on its half-decade legal fight against the San Francisco-based company, Ripple chief executive Brad Garlinghouse revealed on Wednesday.

The case was "doomed from the start" and the victory "resounding" not only for Ripple, but also "for crypto, every way you look at it", chief executive Mr Garlinghouse declared in an X post.

Ripple said it was "the first crypto company with the grit and resources to stand up to the SEC’s overreach". However, the win may not have much of a ripple effect on the broader sentiment within the industry.

Why was the SEC chasing Ripple?

The Ripple-SEC tussle began in 2020 when the regulator alleged that the company raised $1.3 billion in 2013 by selling the token in an unregistered security offering. Ripple countered that XRP should not be treated as a security.

The case came to an end in July 2023 when a judge ruled that XRP – and, broadly, cryptocurrency – is not a security if it is sold to the public on an exchange, but would be if sold to institutional investors. That dealt a major blow to the SEC's efforts to rein in the industry.

Shortly after that, the company said its win highlighted the need for industry players and governments to collaborate and work together to help advance the technology deemed the future of finance – instead of going to court and try to take down crypto players – Ripple president Monica Long told The National.

Is it really over?

Not quite: Ripple and the SEC are still locked in court over part of their litigation involving a $125 million fine imposed by the judge who handed the company the 2023 victory.

The fine is in escrow; Ripple is to decide if it will appeal or pay up, the company's chief legal officer Stuart Alderoty told Bloomberg.

How did XRP react?

As expected, XRP – the fourth-biggest cryptocurrency by market capitalisation, according to CoinMarketCap data – jumped by about 10 per cent to more than $2.51 following the news.

However, it quickly cooled down: as of Friday afternoon, XRP has lost about 5.6 per cent from that peak. That might have been a knee-jerk reaction, since the crypto industry has more things to worry about.

What's muting Ripple's victory?

Two major things: the uncertainty stemming from the trade wars, led by the administration of US President Donald Trump, and the general volatility in stock markets.

Bitcoin and the overall industry soared to new heights after Mr Trump recaptured the White House, promising to "fight like hell" to protect cryptos. However, the magic has since faded, amid America's tariff wars with its key trading partners.

Last month's record $1.5 billion hack of Dubai-based Bybit didn't help sentiment either, as it continued to show the vulnerability of the largely unregulated digital assets industry.

Meanwhile, stock markets are also feeling the pressure of macroeconomic and geopolitical pressures, despite positive data coming from the US and China, the world's two biggest economies.

That's because investors are now reconsidering their positions on high-risk assets like cryptos and trending towards safer ones such as gold, which hit another all-time high on Thursday breaching the $3,000 mark for the first time last week.

On Wall Street, major indices are down in 2025: the S&P 500 has lost 3.7 per cent, the Dow Jones Industrial Average has retreated 1.4 per cent and the tech-heavy Nasdaq Composite has shed 8.4 per cent. At this point last year, the Dow was up nearly 5 per cent, while both the S&P 500 and Nasdaq were soaring at least 9 per cent.

The effects of all these have been mirrored in the crypto market: from a record high of more than $109,000 in January, Bitcoin has retreated by nearly a quarter. It was trading at a little more than $83,500 in Friday afternoon trading.