What happened

Over the past 24 hours, the price of the cryptocurrency XRP (XRP 3.47%) traded more than 12% higher as of 11:17 a.m. ET today after Ripple Labs, the company behind XRP, looked to be on the verge of winning a long-standing court battle.

So what

In 2020, the Securities and Exchange Commission (SEC) sued Ripple Labs for not registering XRP as a security. The SEC also claimed the founders of Ripple and XRP did not provide the proper disclosure.

The court case is being closely watched by the crypto community because there has been an ongoing debate over whether cryptocurrencies should be regulated as securities by the SEC, which would likely subject them to more strict enforcement.

Crypto advocates argue that digital assets should be regulated as commodities by the Commodities Futures Trading Commission (CFTC). The case could set precedent for future similar battles.

Both the SEC and Ripple Labs both recently called for the U.S. Southern District Court of New York to make summary judgments on the case.

Ripple's CEO Brad Garlinghouse recently said in a tweet that the calls for a summary judgment "make it clear the SEC isn't interested in applying the law. They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress."

Now what

The market seems to think a favorable outcome is coming for Ripple Labs, and it also appears that the SEC has taken a softer tone on this matter more recently. 

SEC Chair Gary Gensler not too long ago at a conference said he thought Bitcoin and Ethereum should be regulated by the CFTC.

If XRP wins the case, it will certainly remove the risk of further legal action against the cryptocurrency and Ripple Labs. It will also be a win for the entire crypto industry because it does not set a precedent to treat digital assets as securities.