NEW YORK CITY, NY – The Securities and Exchange Commission’s (SEC) plans to appeal the Programmatic Sales of XRP ruling may face challenges from external factors. One of these factors is a pending ruling on the Coinbase Motion to Dismiss, where Coinbase argues that the SEC lacks the authority to regulate US crypto exchanges. Another potential influence is an ongoing investigation by the Office of Inspector General into conflicts of interest within the SEC relating to cryptocurrencies.
Coinbase, a leading US crypto exchange, filed a Motion to Dismiss in August, which was heard by Judge Katherine Failla on January 17. Legal experts believe that Coinbase presented a strong argument, potentially favoring their position. If the Motion to Dismiss is granted by Judge Failla, the SEC is likely to appeal the ruling. This could result in the temporary suspension of the SEC’s regulation of crypto exchanges, prompting US lawmakers to expedite legislation for the protection of retail investors.
A favorable outcome for Coinbase in the SEC v Coinbase case could also impact the ongoing case between the SEC and Ripple. Legal experts speculate that a victory for Coinbase could pressure the SEC into settling the Ripple case, eliminating the option for further appeals.
Furthermore, a potential ripple effect from a Coinbase victory may be seen in the Lummis and Gillibrand Responsible Financial Innovation Act. This bill, introduced by Senators Cynthia Lummis and Kirsten Gillibrand in 2022, aims to foster innovation in the digital asset space while ensuring investor protection. If the bill gains traction, it would grant the Commodity Futures Trading Commission (CFTC) greater oversight over the US digital asset industry.
Meanwhile, the Office of Inspector General (OIG) is nearing the conclusion of its investigations into conflicts of interest within the SEC. These investigations were prompted by Empower Oversight, an organization that filed a lawsuit against the SEC, alleging biased actions against XRP and Ripple. Particularly, the OIG is looking into allegations that former SEC Director William Hinman received millions of dollars from Simpson Thacher, his former employer, leading to potential conflicts of interest.
In light of these investigations, SEC Chair Gensler may face mounting pressure to settle the Ripple case if a conflict of interest is discovered. Hinman played a significant role in the SEC v Ripple case and made headlines for stating that Bitcoin and Ethereum are not securities. Documents related to his speeches revealed warnings from the Ethics division about his interactions with Simpson Thacher, but Hinman continued to meet with them regardless.
Considering the potential implications of the SEC v Coinbase ruling, the ongoing Ripple case, and the OIG investigation, developments in the crypto industry will be closely monitored. The outcome of these legal battles and regulatory investigations could shape the future of the digital asset market.
Turning our attention to XRP price action, technical analysis indicates that XRP is currently below the 50-day and 200-day exponential moving averages (EMAs), implying bearish price signals. However, if XRP breaks above the $0.5470 resistance level and the 50-day EMA, it could open the door for a challenge of the $0.5835 resistance level. Conversely, a drop below the $0.5350 handle would suggest a potential decline towards the $0.5042 support level. It is worth noting that the 14-day relative strength index (RSI) reading of 50.69 suggests a possible return to the $0.5835 resistance level before entering overbought territory.
At the 4-hourly timeframe, XRP remains below the 50-day EMA but above the 200-day EMA, signaling a mix of near-term bearishness and longer-term bullishness. A successful break above the $0.5470 resistance level and the 50-day EMA could pave the way for a move towards the $0.5835 resistance level. Conversely, a break below the 200-day EMA would bring the $0.5042 support level into focus. The 4-hourly RSI reading of 41.88 suggests a potential drop below the $0.52 handle before reaching oversold territory.
As the SEC v Coinbase case unfolds, and the Ripple case and OIG investigation progress, market participants will closely watch these developments while analyzing the impact on XRP’s price.