XRP (XRP 0.68%) seems to keep having doors opened for it lately. Each time there's a new positive catalyst, it paves the way for the coin to continue to rise over the coming years.
There are three fairly recent developments that make XRP worth buying and holding for at least three years. Let's take a look at each and put them into context.
1. The legal woes are likely (nearly) over
The Securities and Exchange Commission (SEC) has been in a legal battle with Ripple, the company that develops XRP, since late 2020. The issue in contention was whether Ripple broke securities laws by offering XRP without filing the relevant paperwork with regulators. That battle is now winding down, and by the looks of it, XRP has won decisively.
The SEC and Ripple jointly filed a motion on May 8, seeking to settle the SEC's lawsuit for a total of $50 million, down from a prior agreed-upon sum of $125 million. The motion is now being considered by a judge. If the judge assents, Ripple will get its $75 million back from the previously planned settlement.
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More importantly, it'll be free to continue issuing and developing XRP without the fear of regulators shutting down its operations and rendering the coin worthless. As such, perhaps the single biggest risk that the coin was exposed to is now -- nearly -- in the rearview mirror, which is another reason to buy it.
2. A big acquisition just got the green light
On April 8, Ripple paid around $1.2 billion to acquire a company called Hidden Road, which is a type of business called a prime broker. Prime brokers offer services to other financial companies, enabling them to borrow funds and execute their trades, among other things.
Now, because Ripple owns Hidden Road, certain stablecoins on XRP's ledger can be used as collateral for institutional investors like hedge funds that use Hidden Road's platform. Critically, those stablecoins can now be used as collateral for borrowing in both the cryptocurrency sector and the traditional financial sector, meaning that they're almost like a financial bridge between the two. Another benefit is that all the post-trade activities that Hidden Road offers to its clients will be moved to XRP's ledger, generating significant volume for the chain, as well as a larger supply of on-chain capital.
The sum of these benefits is that XRP will now be undeniably involved in the financial plumbing of a system that institutional investors actually use to accomplish their objectives. That's extra marketing for them to adopt XRP to save on their costs, and the new capital stored on the chain will likely increase its value as well. Over time, the price effect could be substantial.
3. It'll probably soon be retained by the U.S. government
As you've probably heard, there was recently an executive order in the U.S. that mandated the creation of a Digital Asset Stockpile (DAS). While that stockpile has not yet been implemented, if it is, XRP is slated for inclusion in it. That means that the U.S. government will be a long-term holder of the coin, if not necessarily a purchaser at the market.
Under the proposed DAS, the U.S. government will hold onto seized digital assets, including XRP, instead of selling them. Thus, there won't be as much floating supply of XRP, as the retained assets will likely be held in the DAS semi-permanently, or at least until another administration changes the policy. With less circulating supply, buyers will need to compete over the remaining slices of the pie, potentially sending prices grinding higher over the course of years at a slightly faster pace than they would otherwise.
Another bullish dimension of XRP's inclusion in the DAS is that it signals that the government thinks it's valuable enough to hold on to. When paired with the other regulatory catalysts and the coin's usage by players in the traditional financial industry, it's gaining a lot of credibility as an asset, and that could also help it to reprice upwards.
