Altcoins
XRP After the SEC Case: Payment Rail Reality Check
Ripple’s legal battle with the SEC ended without the industry-defining clarity either side claimed. What it did produce is a clearer picture of XRP’s actual utility — and why the payment use case is more complicated to realise than the project’s advocates have historically suggested. Note: This article discusses ongoing regulatory developments and network usage … Continued
Key takeaways
- The Ripple-SEC lawsuit began in December 2020 when the Securities and Exchange Commission alleged that Ripple Labs had conducted an unregistered securities offering through XRP sales.
- Ripple’s original thesis was straightforward: cross-border payments are slow and expensive because correspondent banking requires pre-funded nostro accounts at each step of a multi-hop transfer.
- XRP’s payment thesis existed in a relatively uncrowded field in 2017.
- The XRP Ledger has been expanding beyond its payments origin.
- The most important near-term development for XRP is whether the Ripple Payments product achieves verifiable, independently auditable volume growth in non-major corridors.
Ripple’s legal battle with the SEC ended without the industry-defining clarity either side claimed. What it did produce is a clearer picture of XRP’s actual utility — and why the payment use case is more complicated to realise than the project’s advocates have historically suggested.
Note: This article discusses ongoing regulatory developments and network usage data. It is not financial advice. Regulatory outcomes and network metrics can change.
What the Case Actually Settled — and What It Did Not
The Ripple-SEC lawsuit began in December 2020 when the Securities and Exchange Commission alleged that Ripple Labs had conducted an unregistered securities offering through XRP sales. It ended, for practical purposes, in August 2024 when a federal judge imposed a $125 million penalty on Ripple — down from the $2 billion the SEC had sought — and declined to issue an injunction that would have barred future XRP sales.
The ruling’s most quoted element was Judge Analisa Torres’s 2023 summary judgment, which found that XRP sales on secondary markets to retail investors did not constitute securities transactions, while institutional sales did. This was partial, not total, vindication. The Second Circuit’s legal landscape means the ruling has persuasive but not binding authority on other cases. The SEC appealed; the appeal was eventually dropped in early 2025 as part of the broader regulatory reset under new commission leadership.
What the litigation did not resolve: the Howey test’s application to other crypto assets, the question of whether XRP is a commodity or security for purposes of exchange registration, or the international regulatory treatment of XRP in jurisdictions outside the US. Those questions remain open and are being addressed through separate processes — most notably the EU’s MiCA framework, which you can read about in our MiCA explainer.
The XRP Ledger as a Payment Rail: Where It Actually Stands
Ripple’s original thesis was straightforward: cross-border payments are slow and expensive because correspondent banking requires pre-funded nostro accounts at each step of a multi-hop transfer. XRP could serve as a bridge currency, allowing a sender to exchange local currency to XRP, transfer it in seconds, and have the recipient exchange XRP back to local currency — eliminating the need for pre-funded nostro accounts.
This thesis has faced a persistent practical challenge: it requires deep, liquid XRP markets on both ends of the transaction. For major currency corridors like USD-EUR or USD-GBP, that liquidity is relatively available. For the corridors where correspondent banking is most expensive — USD-PHP, GBP-NGN, EUR-BRL — the XRP market depth is thinner, meaning large transfers either move the price against the user or must be split into smaller tranches.
Ripple’s On-Demand Liquidity (ODL) product, now rebranded as Ripple Payments, addresses this by pre-staging liquidity in specific corridors. The company has disclosed usage growth in the Philippines, Mexico, and Australia corridors. Ripple’s published usage reports show volume growth in ODL over 2023 and 2024, though independent verification of these figures is difficult because Ripple does not provide granular, auditable transaction data in the way that on-chain data allows.
On-chain, the XRP Ledger’s native DEX and payment channel infrastructure handles a range of real payment flows, primarily in Southeast Asia and Japan, where Ripple has concentrated commercial relationships. SBI Holdings’ adoption of XRP for some domestic Japan payment flows is the most cited real-world deployment. The XRPL also supports USD-collateralised stablecoins through its built-in DEX.
The Competition Has Not Stood Still
XRP’s payment thesis existed in a relatively uncrowded field in 2017. By mid-2026, the competitive landscape is substantially different.
Stellar (XLM), which forked from the Ripple codebase in 2014, has made significant inroads in the same corridors Ripple targets, particularly in Africa and Southeast Asia, often through partnerships with fintech startups rather than traditional banks. The Stellar Development Foundation’s non-profit structure gives it different commercial incentives than Ripple.
Stablecoin-based cross-border payments — particularly USDT and USDC on Tron (for small-value, high-frequency remittances) and on Solana (for faster settlement) — have captured meaningful volume in corridors where the terminal cash-out infrastructure accepts stablecoins. Circle’s CCTP (Cross-Chain Transfer Protocol) enables USDC to move across chains, adding another competitor to XRP’s bridge currency thesis.
Traditional payment infrastructure has also adapted. SWIFT’s GPI (Global Payments Innovation) has improved same-day settlement rates significantly from its pre-2017 baseline. Visa’s B2B Connect and JPMorgan’s Kinexys (formerly Onyx) offer tokenised interbank settlement. The urgency that made XRP compelling in 2017 has partly been addressed by the incumbent infrastructure improving.
XRPL’s Ecosystem: Beyond Payments
The XRP Ledger has been expanding beyond its payments origin. The introduction of EVM sidechain support (the XRPL EVM sidechain) allows Ethereum-compatible smart contracts to settle with XRP as a gas token, opening the ledger to DeFi applications that its native architecture was not designed for.
The ledger’s native AMM (automated market maker), activated in early 2024, enables on-chain liquidity provision without bridging to an EVM environment. Non-fungible tokens have been implemented natively on the XRPL through the XLS-20 standard, giving the network a competitive offering in that segment.
Whether these expansions broaden XRP’s use case in a sustainable way or dilute focus from its core payment thesis is a legitimate question. The XRPL’s competitive advantages — low fees, high throughput, fast settlement — are also present in other networks that have larger developer ecosystems. See our DeFi category for coverage of the broader competitive landscape.
What to Watch Through 2026 and Beyond
The most important near-term development for XRP is whether the Ripple Payments product achieves verifiable, independently auditable volume growth in non-major corridors. If ODL volume in USD-PHP and similar corridors grows to the point where it is visible in central bank settlement data or in the on-chain XRPL data, it validates the bridge-currency thesis more credibly than company-published figures alone.
The US regulatory environment matters less than it did in 2020. XRP is listed on most major global exchanges. The securities classification question in the US affects Ripple’s ability to sell to institutional counterparties directly, but it does not affect ordinary purchase and transfer of XRP on secondary markets.
XRPL’s EVM sidechain and AMM will need meaningful TVL and user adoption by end of 2026 to register as genuine ecosystem expansion rather than announced features. Current TVL on the EVM sidechain is modest relative to established EVM-compatible chains.
Frequently Asked Questions
Is XRP a security in the United States?
The 2023 court ruling found that secondary-market sales of XRP to retail investors did not meet the Howey test for securities. Institutional sales by Ripple itself were found to be securities transactions. The SEC appeal was dropped in 2025. The legal question is functionally resolved for most practical purposes, though the ruling is not binding precedent for other cases.
What is the difference between XRP and the XRP Ledger?
XRP is the native digital asset. The XRP Ledger (XRPL) is the decentralised network it runs on, operated by validators that are independent of Ripple Labs. Ripple holds a significant portion of XRP supply in escrow but does not control the XRPL network.
How does XRP compare to stablecoins for cross-border payments?
XRP avoids the need for dollar collateral but introduces exchange-rate risk at both ends of a transaction unless both sides have deep local-currency liquidity. Stablecoins eliminate exchange-rate risk but require dollar collateral backing and depend on off-ramp infrastructure at the destination. Each approach has corridors where it performs better.
Sources
- Ripple Insights — usage and product reports
- SEC v. Ripple Labs — court documents (SDNY, 2020-2025)
- XRPL.org — ledger documentation and on-chain data
- SBI Holdings annual reports — XRP integration disclosures