I’ve already made $ 3,200 using XRP (aka Ripple). Here’s why I keep holding on.

I picked up $ 1,180 worth of it XRP (CRYPTO: XRP) Cryptocurrency in Spring 2019. Back then, I thought the token, also known as Ripple after the blockchain-based payment system it operates, was heading for a great future. Cryptocurrency services that enable cross-border money transfers with low friction and very low transaction fees looked like a fantastic idea in the long run.

XRP and Ripple have seen some wild swings since then. Many investors are afraid to touch the token due to legal and regulatory challenges. But I’m sticking to my humble XRP investment, which has grown 270% in less than three years. Here’s why.

What’s at the end of this street? Image source: Getty Images.

Regulatory drama

Leading cryptocurrency trading service Coin base (NASDAQ: COIN) suspended XRP trading in January 2021. The token is still working its way through the regulatory challenges that led to this event, and the future of Ripple as a solution for international money transfers is in the air.

The XRP in my Coinbase account could find a new home on another trading platform that supports the currency or a digital wallet. Coinbase no longer allows customers to buy or sell the token directly, but it’s okay to send your XRP to a different digital wallet address. This includes sending payments in that currency to someone else’s wallet. There are some limits, however. For example, these transactions must involve at least 22 XRP tokens, which is roughly $ 26 at today’s exchange rates.

Coinbase was far from the only crypto exchange that restricted or stopped XRP trading when the SEC went into effect. In fact, I am not aware of any exchange that allows XRP trading for US citizens today. This uncomfortable status quo will likely persist until the Ripple Foundation settles its differences with the Securities and Exchange Commission (SEC).

What is the problem?

The SEC opened an investigation against Ripple Labs in December 2020, alleging the organization and its executives raised $ 1.3 billion from the sale of XRP as an unregistered security.

Ripple continues to battle the SEC’s actions because they don’t believe they’ve broken securities trading rules. Instead, they argue that XRP is a digital asset that is more similar to traditional currencies such as the US dollar, the euro, or the Japanese yen. It’s just a fully digital version of the same concept designed to act as an agent for processing transactions. In particular, XRP is intended to serve as an intermediary in transactions between two different real currencies. The rules for trading currencies differ from the framework for buying and selling securities such as stocks and bonds.

In a nutshell, the SEC is trying to impose one set of rules on Ripple’s business while Ripple Labs favors another.

Golden coin with the XRP logo in front of hundred dollar bills and other coins.

XRP wants to be treated like a currency. Image source: Getty Images.

What’s next?

I’m not a lawyer and the SEC lawsuit against Ripple is pending. It could be years before we reach a final verdict. Even so, I don’t mind holding onto my XRP tokens until the SEC drama hits that last page.

You see, this regulatory review is likely to help the U.S. government and other regulators around the world solidify their regulatory standards for the crypto market as a whole. And if it turns out that currency-like tokens like XRP should fall under the strict trading restrictions of equity-like securities, I might lose some money on my XRP investment.

However, if it looks like a currency, is floating and quacking like a currency, then chances are that XRP will eventually conform to the trading rules of the forex market. That’s the bottom line I expect based on what we’ve seen so far. XRP looks like a basic transaction processing tool, not so much like becoming a partner in Ripple Labs.

Even in its current state of paralysis, XRP is the sixth largest cryptocurrency by market cap with a market cap of $ 55.5 billion. That amount should increase as Ripple reaches the end of its SEC scramble and instead goes back to business. There is a real demand for a crypto-powered foreign currency service that doesn’t have the slow billing and high fees of a full-featured cryptocurrency like e-mail Bitcoin.

For example, in July Ripple signed a cross-border payment agreement with the business-to-business payment service Currencycloud. Credit card giant three weeks later Visa (NYSE: V) Currencycloud acquired at full throttle. I’m not saying Visa got its hands on Ripple services and XRP tokens without ruffling too many regulatory feathers, but that’s a direct result of that $ 940 million deal.

Hold on for now; I would probably buy more XRP if I could

XRP prices fell as SEC action began, but investors have gained confidence and token prices are skyrocketing amid the legal saga. I’m not the only optimist here. So far, my pristine XRP tokens have gained a market value of $ 3,200 and I have reason to believe that more is to come.

Setting the regulatory framework will be good for all cryptocurrencies in the long run, even if some of the legal decisions don’t get the details right. I am ready to take my risk for a healthy bottom line and take a bumpy ride to my ultimate destination.

So yeah, I’ll hold onto my XRP token until the bitter end – because the ending could turn out to be pretty sweet.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all reflect critically about investing and make decisions that will help us get smarter, happier, and richer.

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