The role of American blockchain payments firm Ripple Labs Inc in the circulating supply of XRP is still being questioned today amid the ongoing legal battle between the company and the United States Securities and Exchange Commission (SEC).
The XRP Buyback Concern
There has always been a full understanding on the role of Ripple with respect to the release of XRP coin from escrow to help in managing the supply of the cryptocurrency. While these buybacks are crucial to help manage liquidity, there is a hazy understanding on the role the firm plays as it relates to the buyback of the coin.
The buyback strategy is most specific to stocks in which the company deflates the supply of the asset by acquiring them from the open market to introduce the element of scarcity. There has never been an official comment regarding this and with the subject coming up again in the community, the company’s CTO, David Schwartz has waded into the conversation.
He noted that the company does make purchases of XRP but he is not sure if it fits into the same context as is being presented in the current conversation. He noted that with the broad speculations, there is no official source mentioned that anyone can hinge the claims of buyback on.
We do sometimes buy XRP. But I don’t know of anything specific that this could be referring to. And there’s no official source mentioned.
— David “JoelKatz” Schwartz (@JoelKatz) June 25, 2023
Buying back XRP can solidify the SEC’s case of Ripple handling the digital currency as an investment contract. This is because buyback is a strategic effort to increase the value of an asset, and with the lawsuit surpassing 2 years, this has never been a major cause for concern in the court.
Ripple Shunning XRP in Liquidity Hub
The lawsuit that is billed to define the fate of XRP in the US has largely forced Ripple Labs to abandon the cryptocurrency as an asset in its Liquidity Hub.
XRP occupies a pivotal position in the blockchain company’s RippleNet and XRP Ledger protocol but its use is now limited until the lawsuit is over. With Ripple shunning the coin, a host of other partners are also shunning the digital currency, largely leaving its recent price upsurge in the hands of the market to decide.
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