Five years ago, XRP (XRP -3.23%) was sometimes touted as the little cryptocurrency that would someday be favored by big banks. Fast-forward to November 2023, and mega-banks aren't exactly scrambling to adopt it as a form of currency.

Still, this story isn't finished and XRP might still someday be a preferred currency to facilitate foreign-exchange transactions and cross-border payments. Before that could realistically happen, though, XRP (and the company behind it, Ripple Labs) must first survive a David-and-Goliath battle with a seemingly unstoppable regulatory body.

Riding the Ripple roller coaster

Five years ago, at the end of October 2018, XRP traded at about $0.45 per token. Back then, the world of altcoins was akin to the Wild West, though regulators would step up their oversight and legal pressures soon enough.

Since then, many lesser altcoins have fallen by the wayside but XRP has survived and actually gained some value. On the last day of October, XRP traded at about $0.60, representing a 33% gain over the preceding five-year period. Therefore, a $1,000 investment would have turned into $1,333 during that time frame.

That might sound like a decent return on one's investment, but it's a fairly low risk-adjusted reward considering the high level of volatility along the way. Still, at least XRP didn't end up in the altcoin graveyard like many tokens did during the past half-decade.

Indeed, a 33% return on one's investment isn't too bad considering the legal issues that Ripple Labs has faced along the way. Just to recap, the Securities and Exchange Commission (SEC) sued Ripple Labs in 2020, claiming the company was selling the XRP cryptocurrency as an unregistered security to investors. Ripple Chief Executive Officer Brad Garlinghouse argued that XRP was a currency and not a security.

Since then, the legal drama has devolved into something akin to a soap opera. Earlier this year, a New York judge ruled that XRP is "not necessarily a security on its face." More recently, the SEC retracted its own lawsuit against Garlinghouse and Ripple Labs Executive Chairman Chris Larson.

On the other hand, the SEC is allegedly still demanding $770 million in penalties from Ripple Labs for perceived securities-laws violations. As you might expect, XRP's price has responded to these wrinkles in the story. Consequently, investors should be on the lookout for further developments in the battle of the SEC versus Ripple Labs, exhausting as that may be.

Playing follow the leader

If anything might have a greater influence on XRP's price than legal updates, it would be the price trajectory of Bitcoin (BTC -2.44%). After all, Bitcoin is the mothership that tends to drag smaller cryptocurrencies in both directions.

That's not a bad thing as Bitcoin's been on a tear lately. The prospect of an approved spot Bitcoin exchange-traded fund (ETF), whether it would be from BlackRock or Grayscale or another firm, has pushed Bitcoin's price to levels not seen in quite a while.

Again, the gatekeeper is the SEC and its current chairman, Gary Gensler, isn't exactly known for being a crypto advocate. Yet, there's hope on the horizon since BlackRock's considerable capital and clout could get the SEC to relent sooner rather than later.

Or at least, that's what XRP's investors should hope will happen. Without a doubt, an approved spot Bitcoin ETF would have a  catalyzing effect on the token's price.

The domino effect could involve a spot XRP ETF and, perhaps, a slew of altcoin ETFs that include XRP as a holding. If investors can even fantasize about these possibilities, it's a sign that a lot has changed in five years' time.

So, if you feel that these apparent fantasies could become a reality, it might not be a terrible idea to buy and hold a few XRP tokens. Just be sure to keep your position size reasonable -- and be ready for whatever drama might befall XRP in the coming years.