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Special Report: What Does the Court’s Order Mean for XRP and the Broader Crypto Industry?
One of the main stories this week was a U.S. court decision in the Ripple case involving the U.S. Securities and Exchange Commission (SEC). Notably, U.S. District Court Judge Analisa Torres issued a summary judgment opinion holding that the XRP token, by itself, was not a security under U.S. law. Ripple’s XRP token soared by over 50% this past week. Before we elaborate on what happened, why it matters, and what to expect, here is an overview of the broader market last week.
The biggest gainers of last week were Solana (+26%), Optimism (+23%), and Aave (+8%). Given it was classified as a security in recent lawsuit filings by the SEC, Solana, among other tokens like Cardano and Polygon, enjoyed a recovery following the news. Aave’s jump in price and assets under management, as shown in Figure 1, is influenced by the launch of Aave’s GHO stablecoin on the Ethereum Mainnet.
Figure 1: Weekly Price and TVL Developments of Cryptoassets in Major Sectors
Source: 21Shares, CoinGecko, DeFi Llama. Close data as of July 17, 2023.
What Happened
• For the Ripple case, on July 13, Judge Torres issued a summary judgment order that was partly in favor of the SEC and partly in favor of Ripple. Specifically, Judge Torres distinguished between the target of an investment contract (e.g., XRP as a token) versus the sale and marketing of that asset (e.g., the investment contract around the sale or offer of XRP). The former was not held to be a security, but the latter was in certain circumstances. Judge Torres’ decision also held that there were disputes of material fact that were not appropriate to resolve on summary judgment, so there could be a trial relating to a few additional issues (including whether Ripple’s founders aided and abetted Ripple’s securities law violations).
• Key takeaways from the order:
- Programmatic sales (e.g., those sold on exchanges) and certain other distributions of XRP (e.g., to employees, etc.) did not constitute a securities offering.
- Institutional sales constituted a securities offering.
- The Court left open the question of whether secondary market sales of XRP constituted a securities offering, explicitly stating that that question was not before the Court.
• Short-lived recovery following a prolonged decline: Over the past few months, Bitcoin has been experiencing a slow recovery after over a year of decline. On July 13, Bitcoin reached $31.45K, the highest since May 2022. Ethereum, on the other hand, surpassed the $2K, a level last seen in April following the Shanghai upgrade.
Figure 2: Bitcoin and Ethereum’s Price (3 Years)
Source: Glassnode
• How did “altcoins” react? XRP led the market-wide recovery, increasing close to 100%, generating more volume than Bitcoin and Ethereum, as shown in Figure 2. Other assets previously deemed securities, such as Solana, Cardano, and Polygon, were also positively impacted. The news of the ruling led them to soar by roughly close to 30% each over the following 48 hours, to then retrace over the weekend. Finally, XRP surpassed BNB in its ranking by market value to regain its position as the fourth largest cryptoasset, while its open interest for XRP futures soared by more than 90% following Judge Torres’ verdict.
Figure 3: Market Share of Crypto Trade Volume
Source: Kaiko
What to Expect
• Potential Relisting of XRP Across US-Based Exchanges
Given the recent court decision, we may expect a reversal on relisting the XRP token. The impact could extend along to include the suite of the other assets allegedly deemed as a security by the SEC in their legal dispute against Coinbase and Binance, such as Solana, Matic, Cardano, and a dozen others.
• Revised Valuations
The implications of this case have the potential to fundamentally reshape the strategies employed by foundations and developers when bootstrapping their services and products. In a scenario where projects choose to launch their applications without a token, they would likely opt for fundraising through traditional venture capital (VC) and angel rounds. Furthermore, bypassing the token in the initial stages of the project could trigger a significant shift in investor valuations of existing protocols, prompting a closer examination of the project’s underlying fundamentals. Key factors such as recurring revenue and user retention, measured through active and returning users, would take precedence in this revised valuation framework.
For further insights on applying valuation frameworks to digital assets, refer to our State of Crypto Issue 7.
• New Token Economics and Go-To-Market Strategies
If the ruling remains unchanged, projects will likely be encouraged to adopt community-owned governance models, driven by the need to accommodate ‘asset morphing.’ The latter is a concept argued as part of the unconcealed Hinman documents that outline how certain assets can transition from reflecting security characteristics to representing commodities as decentralization progresses.
Moreover, as the sale of XRP to institutional investors was deemed an unregistered sale of securities, projects may reconsider raising equity through primary (non-exempt) sales involving private and venture capital. Instead, they might prioritize a sustainable protocol path that generates additional revenue from the outset, with less emphasis on subsidized demand to incentivize user adoption and capital migration during the early growth stages.
Uniswap is a compelling case study where they refrained from launching a token until after an extensive two-year period dedicated to refining their platform through user iterations. This meticulous approach has proven instrumental in establishing Uniswap as one of the most prosperous decentralized exchanges, boasting a substantial user base with consistently high daily activity levels.
Consequently, we foresee two potential outcomes resulting from this anticipated shift in market behavior. First, more projects at the application layer could postpone token launches until they establish alignment between their product’s core services and market demand. Tokens would then serve as a must-have utility, enabling users access to a given product suite rather than solely serving as governance tokens. The argument changes regarding smart-contract platforms as a token is needed to maintain security, decentralization, and stakeholders’ alignment. So instead, we could see more emphasis on secondary market sales for these types of tokens instead of the token-as-fundraising model witnessed in 2017.
Finally, established projects may overhaul their entire business models to enhance token value capture. A notable example is Polygon, which has unveiled a new network architecture where the token plays a more prominent and active role within the ecosystem. Within the emerging ecosystem, POL will serve as the essential asset for validating interconnected chains across the interoperable Polygon universe, thereby fostering increased engagement and participation among token holders.
Bookmarks
• Want to learn more about Ripple? Read our investment thesis here.
• Celsius has been selling its assets as part of its bankruptcy proceedings. You can track the massive sales in our dashboard here.
• Learn more about Ethereum’s Liquid Staking Derivatives, which now constitute the largest DeFi sector by AUM and are expected to continue proliferating as the ETH staking ratio grows. Check out our dashboard here.
• We had Blockdaemon as our guest in last week’s Analyst Call. Watch here.
Next Week’s Calendar
These are the top 3 events we’re monitoring for next week.
• Polygon 2.0 last week of announcements: we should learn more about Polygon’s new governance system.
• ETH CC: the largest ETH annual conference, which ends on the 20th, should continue to reveal more details about the exciting new primitives and technologies of the Ethereum ecosystem.
• Lummis-Gillibrand Act: Sens. Cynthia Lummis and Kirsten Gillibrand will bring a revised version of their comprehensive crypto regulatory bill to the Senate on Wednesday.
Source: Forex Factory
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
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Montrose storsatsning på ETFer fortsätter – lanserar Sveriges första globala ETF med hävstång
En europeisk försvarsöversikt: Med ökande hot och USAs stöd inte längre garanterat, håller europeiska NATO-medlemmar på att se över sina försvarsstrategier och kraftigt öka militärutgifterna. Efter ett decennium av misslyckande med att nå målet på 2 % av BNP har Europa kollektivt underutnyttjat med uppskattningsvis 850 miljarder euro. Nu, för att återuppbygga och modernisera sina väpnade styrkor, riktar regeringarna denna förnyade investering mot europeiska försvarsföretag – vilket ökar kontinentens strategiska självtillit.
Ett europeiskt försvar
Europa åtar sig att göra seriösa försvarsinvesteringar
Efter årtionden av underutnyttjande, rustar Europa äntligen upp sig. EU har fastställt en försvarsplan på 800 miljarder euro, medan enskilda europeiska NATO-medlemmar – från Polen till Storbritannien – snabbt ökar sina egna militärbudgetar.
Strategisk autonomi innebär att köpa europeiskt
Europas upprustning handlar inte bara om att spendera mer – det handlar om att bygga europeiskt oberoende och självständighet inom försvaret. För att minska beroendet av amerikansk utrustning prioriterar EU europeiskt tillverkade vapen, fordon och system, vilket ger en stark medvind till den europeiska försvarssektorn.
Byggd av Europas ledande ETF-experter för försvar
Denna ETF bygger på HANetfs bevisade framgång inom globala försvarsinvesteringar. Uppbackad av teamet bakom den snabbväxande NATO ETF erbjuder den diversifierad tillgång till Europas försvarssektor – från traditionella försvarsnamn till cybersäkerhet, vilket speglar den moderna krigföringens natur. HANetf är ett europeiskt företag.
Indexmetodik
Med ökande hot och USAs stöd inte längre garanterat, håller europeiska NATO-medlemmar på att se över sina försvarsstrategier och kraftigt öka militärutgifterna. Efter ett decennium av misslyckande med att nå målet på 2 procent av BNP har Europa kollektivt underutnyttjat med uppskattningsvis 850 miljarder euro. Nu, för att återuppbygga och modernisera sina väpnade styrkor, riktar regeringarna denna förnyade investering mot europeiska försvarsföretag – vilket ökar kontinentens strategiska självtillit.
Landsviktningar
Största innehav
Data as of March 31, 2025. Source: VettaFi
Rheinmetall
Rheinmetall, en tyskbaserad försvarsentreprenör, har legat i framkant när det gäller att modernisera NATOs militärer och åtgärda kritiska luckor i europeisk försvarskapacitet. Rheinmetall är känt för sin expertis inom pansarfordon, artillerisystem och ammunition, och har sett en ökning i efterfrågan på grund av ökade Natos försvarsutgifter efter Rysslands invasion av Ukraina.
Att ta itu med geopolitiska spänningar
Rheinmetall har utnyttjat de europeiska NATO-medlemmarnas strävan att nå eller överträffa målet för försvarsutgifterna på 2 procent av BNP. Med många Nato-länder som försöker modernisera sina landstyrkor, har Rheinmetalls erbjudanden, inklusive Leopard 2-stridsvagnsuppgraderingarna och Lynx pansarfordon, varit i hög efterfrågan.
Stark orderbok
Shell produktionskapacitet
BAE Systems
BAE Systems, med huvudkontor i Storbritannien, är en av de största försvarsentreprenörerna globalt och en kritisk leverantör för Natos försvarsinfrastruktur. Med en portfölj som spänner över luft-, hav-, land- och cyberdomäner har BAE Systems varit avgörande för att göra det möjligt för NATO-medlemmar att förbättra sin försvarsförmåga.
Betydande bidrag till luftförsvaret
BAE Systems tillverkar nyckelkomponenter till Eurofighter Typhoon och F-35 LightningII, båda väsentliga för Natos överlägsenhet i luften. Företaget tillhandahåller även avancerade radar- och elektroniska krigföringssystem för att stödja NATO-operationer.
AUKUS ubåtsprogram
Cyber och elektronisk krigföring
Handla ASWC ETF
HANetf Future of Defence UCITS ETF (ASWC ETF) är en europeisk börshandlad fond. Denna fond handlas på flera olika börser, till exempel Deutsche Boerse Xetra och London Stock Exchange. Av den anledningen förekommer olika kortnamn på samma börshandlade fond.
Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel Nordnet, SAVR, DEGIRO och Avanza.
MONTLEV, Sveriges första globala ETF med hävstång
Montrose storsatsning på ETFer fortsätter – lanserar Sveriges första globala ETF med hävstång
Kommer snart – en europeisk försvars-ETF, från ett europeiskt företag, utan USA-exponering
Vem ska ha en LEI-kod?
BSE9 ETF bara företagsobligationer med förfall 2029
Fonder som ger exponering mot försvarsindustrin
WisdomTree lanserar europeisk försvarsfond.
Warren Buffetts råd om vad man ska göra när börsen kraschar
De bästa börshandlade fonderna för tyska utdelningsaktier
Trumps återkomst får europeiska aktier att rusa
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Nyheter2 veckor sedanFonder som ger exponering mot försvarsindustrin
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Nyheter3 veckor sedanWisdomTree lanserar europeisk försvarsfond.
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Nyheter1 vecka sedanWarren Buffetts råd om vad man ska göra när börsen kraschar
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Nyheter3 veckor sedanDe bästa börshandlade fonderna för tyska utdelningsaktier
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Nyheter4 veckor sedanTrumps återkomst får europeiska aktier att rusa
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Nyheter4 dagar sedanSvenskarna har en ny favorit-ETF
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Nyheter4 veckor sedanUtdelning i XACT Norden Högutdelande mars 2025
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Nyheter2 veckor sedanHANetf lanserar Europa-fokuserad försvars-ETF
