The election of Donald Trump has had a boon to crypto. In the weeks after Nov. 5, Bitcoin topped $100,000 for the first time as investors anticipate a major shift in how the industry is viewed by the nation's top office. The effects were felt well beyond Bitcoin, however, with altcoins like Solana and Cardano following suit.
Of all the projects that could benefit from a friendlier administration, XRP (XRP 1.68%) may stand to gain the most. The coin has been a target of the Securities and Exchange Commission (SEC) and its primary use case lies within the tightly regulated banking industry. Changes in personnel and policy could have a huge impact.
Trump seems like he will be a friend to the industry
President-elect Trump made it clear on the campaign trail that he didn't just view the industry favorably, but intends to make America the "crypto capital of the planet." In July, at the biggest Bitcoin conference of the year, Trump gave the keynote address in which he promised the federal government would "keep 100% of all the bitcoin the U.S. government currently holds or acquires into the future." Shortly after, he sat down with executives from the largest U.S. miners in a closed meeting at Mar-a-Lago.
Arguably his most important promise for XRP, however, was his pledge to replace Gary Gensler, who as chairman of Securities and Exchange Commission has taken an aggressive approach to crypto regulation. Under Gensler, XRP was the target of a major SEC lawsuit. Although a judge ruled in XRP's favor, the ruling will likely be appealed by the SEC.
Trump won't have to fire Gensler, however, as he said he would resignation when Trump takes office. Trump's pick to replace him, Paul Atkins, is likely to take a different tack from his predecessor. XRP's regulatory woes could be a thing of the past.
XRP may face less regulatory scrutiny, but that's not the whole picture
While XRP's regulatory future is looking up, I'm not convinced it's where you should put your money. I think its potential is overhyped and it's currently overvalued.
While XRP can be used peer-to-peer, it was created to be used with RippleNet, a blockchain-based settlement and cross-border payment network for banks and financial institutions. RippleNet is faster and cheaper than SWIFT, the industry standard.
Proponents believe that as adoption increases, so will the value of XRP as banks have to buy it in order to transact. Here's the problem: Although there are certain cases in which they do, for the most part, banks don't actually need to use XRP to use RippleNet. They can accomplish most of what they need to without ever having to deal with XRP -- no accumulating XRP, no holding reserves of XRP. So, even if Ripple finds itself as the standard in the industry, it won't lead to the supply crunch some expect.
People often point to the hundreds of billions in fees the banks pay each year using legacy payments systems. Those fees could enrich XRP holders if the network is adopted widely, the thinking goes, but this falls flat as well. Ripple's primary value comes from its tiny fees that are orders of magnitude less than traditional means. Even if it did capture the whole market those hundreds of billions become hundreds of millions at best. Though it's difficult to value a cryptocurrency the way you would a stock, given XRP's current market capitalization of more than $100 billion, I believe the best-case scenario is more than baked into the price already.
XRP is currently fueled more by hype than substance in my opinion. I would look to Bitcoin for an investment that has a real chance of beating the market for years to come. As Jan. 20 fast approaches, Bitcoin is a much better option.
