It may be a wild ride, but this cryptocurrency could generate some serious wealth. Here’s why

Just a few years ago, it looked XRP (XRP 4.70%) he might actually be a crypto millionaire. He had a new and revolutionary idea: using blockchain technology to facilitate fast and low-cost international money transfers. And there’s been plenty of buzz for San Francisco-based Ripple Labs, the company behind the XRP token.

But then came a long, bitter and confusing legal battle with the Securities and Exchange Commission (SEC) that began in December 2020 and has been downhill ever since. XRP has never come close to returning to its all-time high of $3.84 from January 2018 and is currently trading at a low of $0.56. But what if I told you that XRP could be on the verge of a major comeback? There are three catalysts that could generate serious wealth for XRP investors in the future.

Resolution of the case SEC

The first major catalyst is the settlement of the lawsuit between Ripple Labs and the SEC, which has been trying for nearly four years to classify XRP as a security. In early August, the case appeared to be over, with Ripple agreeing to pay $125 million in civil penalties for improperly selling XRP tokens to institutional investors. The SEC was seeking more than $2 billion in fines and penalties, so XRP investors saw that as a win for Ripple.

The price of XRP should have skyrocketed on the news, but it has barely risen in the past month. In fact, it’s been slightly down since early August. You can blame the recent crypto “crash flash” for some of this, but a better explanation might be that there is still a risk that the SEC will appeal the ruling. As a result, investors may simply be waiting for signs of what the SEC might do before piling into XRP.

So here’s the big picture: If XRP can put its legal and regulatory headaches behind it once and for all, it can go back to business as usual. And then the price of XRP could really take off. At the very least, XRP could double to $1, which is exactly what it did last summer when there was a favorable legal development in Ripple’s case.

Expanding the core business

It is important to note that there is actually a profitable business powered by XRP. Most investors only focus on the international money transfer business, which makes sense since that’s how Ripple Labs originally gained prominence. But over the past few years, Ripple has continuously expanded the types of services it can offer financial institutions.

At the moment, Ripple has three main businesses: cross-border payments, digital asset custody and stablecoins. From my perspective, the latter is potentially the most interesting, because it looks like Ripple is on the verge of making a major splash with stablecoins. It is now preparing to launch its own stablecoin to take on the two giants of the stablecoin world: Tether (USDT 0.01%) and USD currency (USDC -0.01%).

Image source: Getty Images.

Pairing the new stablecoin with XRP could be huge from a future growth perspective. For example, Tether has a market cap of $118 billion, making it the third largest crypto by market cap. USD Coin has a market cap of $35 billion, making it the sixth largest crypto.

By comparison, XRP has a market cap of $32 billion, placing it seventh in terms of market value. Considering the billions of dollars involved, this is a huge potential business opportunity, and helps explain why PayPal (PYPL 1.46%) launched a stablecoin last year.

The IPO dream

Another potential catalyst for XRP would be an initial public offering (IPO) for Ripple Labs. If the company can raise money from investors, then it would have a huge pile of cash that it can use to expand both domestically and internationally. And that means big things for XRP because it’s so central to everything Ripple does. Based on one investment firm’s estimates, a successful Ripple IPO could see XRP skyrocket to $7.

Of course, talk of an IPO is highly speculative and would require the SEC’s blessing. That doesn’t seem likely given the four-year battle with the SEC. But one option could be to move more of Ripple’s operations overseas, where it could take advantage of a more favorable regulatory jurisdiction to raise capital from investors.

How likely is an XRP comeback?

XRP remains a highly volatile, highly risky and highly speculative investment. It’s not for the faint of heart, especially since much of the price movement in recent years has been related to what’s happening in the courts. Furthermore, it’s not even clear whether XRP can ever return to business as usual, let alone expand.

That said, it’s easy to see how a small investment in XRP could turn into a big win in a few years. But buckle up, because it’s going to be a wild ride.