Ripple’s RLUSD Stablecoin: Will it Face SEC Scrutiny?

• Ripple tests RLUSD amid SEC scrutiny, signaling potential legal battles ahead.
• XRP shows cautious bullish momentum as Ripple faces ongoing regulatory hurdles.
• RLUSD stablecoin could spark further SEC challenges, impacting Ripple’s market strategy.

Ripple Labs Inc. is pushing forward with new financial technology products while still navigating a complex legal dispute with the U.S. Securities and Exchange Commission (SEC). On August 9, 2024, Ripple announced testing of its Ripple USD (RLUSD) stablecoin.

Ripple, while celebrating a partial victory in its legal battle with the SEC, faces ongoing regulatory scrutiny. Judge Analisa Torres’ recent ruling prevents the SEC from applying U.S. securities laws to Ripple’s future XRP sales, but the company remains under watch for potential future violations.

This ruling creates a tricky situation for Ripple as it seeks approval for the RLUSD stablecoin. The SEC’s stance on unregistered crypto assets further complicates matters.

Pro-crypto attorney Fred Rispoli commented on the implications of the court’s decision, noting that the court rejected the SEC’s draft order, which aimed to impede Ripple’s business operations. Despite being restrictive, Rispoli stressed that the final order does not dismantle Ripple’s business model.

Pro-crypto attorney Fred Rispoli commented on the court’s decision, noting that the court rejected the SEC’s motion for an interlocutory appeal, which, if granted, could have hindered Ripple’s business operations. Rispoli emphasized that the court’s denial of this motion allows Ripple’s business to continue without the immediate threat of further legal restrictions.

Ripple’s decision to pursue regulatory approval for RLUSD might be a strategic response to the final judgment. The company is staying within legal bounds to avoid further litigation, but this path could lead to another clash with the SEC. The SEC would need to prove that RLUSD holders anticipate profits, a key element of the Howey Test, even though the stablecoin is pegged to the U.S. dollar.

In April 2024, the SEC filed a brief targeting Ripple’s stablecoin plans, describing RLUSD as a new unregistered crypto asset. A favorable ruling for Ripple could pave the way for an XRP-spot ETF market, though the SEC is poised to appeal the ruling on Programmatic Sales of XRP.

As of press time, XRP was trading at approximately $0.57540, with a trading volume of $1.30 billion, recording a decrease of 0.23% over the last 24 hours, holding a market cap of $32.26 billion. 

While the convergence of the MACD lines points to a potential slowdown, the technical analysis reveals that the Moving Average Convergence Divergence (MACD) is currently above the zero line, suggesting potential bullish momentum. 

Source: TradingView

With a relative strength index (RSI) of 51.86, the market is seen as neutral, with little significant bias towards either buying or selling.