-
This 1 Reason to Buy XRP Is 1 Reason to Avoid Other Popular Cryptocurrencies
Key Points
The expectation of regulation is pretty much the bedrock of all institutional finance. If a crypto project can't swim through regulated waters, it doesn't really matter how elegant or handy its underlying technology is, because the biggest pools of capital will keep their distance.
XRP (CRYPTO: XRP) is getting explicit regulatory permission to operate in an incredibly important global financial zone, while privacy coins like Zcash (CRYPTO: ZEC) and Monero (CRYPTO: XMR) keep hitting roadblocks because regulators dislike them. Let's take a closer look at what went down and appreciate why it's a worthwhile reason to consider investing in XRP.
Regulatory access is a key consideration
XRP and its blockchain, the XRP Ledger (XRPL), is being developed by Ripple and others to target international payments and transactions. A core part of its investment thesis is that regulated financial companies are experimenting with blockchains for their asset management and money transfer needs, and the projects that regulators are willing to supervise will inevitably gain more opportunities.
Dubai is one of the world's biggest and most important financial centers, with the Dubai International Financial Center (DIFC) implementing specific financial regulations. In November 2023, regulators formally recognized XRP as an approved crypto token for use by licensed businesses in the DIFC.
As of mid-January of this year, RLUSD (the native stablecoin of the XRPL) is now one of just three stablecoins approved for use in the DIFC. This regulatory breakthrough could attract a lot of capital to the XRPL, which would require using a lot of XRP to manage, positively impacting its price.
This new reason to buy XRP would not have been possible without Ripple's consistent collaboration with regulators to ensure compliance.
Privacy coins are built to resist the very thing institutions need
Privacy coins just faced a setback in Dubai, where the same regulators who approved XRP deemed them ineligible for use. Both Zcash and Monero aim to obscure transaction details on most blockchains, but they face stringent restrictions.
Authorities in the DIFC banned coins capable of obscuring a user's identity from crypto exchanges, citing barriers to enforcing anti-money laundering laws. Although investors can still hold them in their wallets, these coins face new challenges in critical jurisdictions like Dubai.
For the average investor, owning assets that might get banned is problematic. In contrast, XRP is likely to continue benefiting from favorable regulatory treatment, making it a more appealing investment.
Should you buy stock in XRP right now?
Before purchasing XRP, consider that the Motley Fool Stock Advisor analyst team identified 10 stocks they believe are the best for investors to buy now, and XRP wasn’t one of them. The stocks on this list have produced significant returns in the past.
This article has been published in fool.com via Yahoo News.
This 1 Reason to Buy XRP Is 1 Reason to Avoid Other Popular Cryptocurrencies
Regulators may not have the only say, but their voice is usually decisive.
finance.yahoo.com
