XRP reclassified by regulators, ushering in new era for institutional crypto
In the year 2025, XRP underwent a transformation in its classification, shifting from a security to a digital commodity. This marked a significant milestone for the cryptocurrency, opening the doors for increased institutional adoption and propelling its market cap to new heights. The reclassification came after a protracted legal battle with the SEC that spanned over five years. The resolution of the case in August 2025, based on a court ruling and the SEC’s withdrawal of appeals, established a regulatory framework that distinguished XRP as a commodity in secondary markets. This move aligned XRP with other major cryptocurrencies like Bitcoin and Ethereum, shedding the regulatory ambiguity that had previously clouded its status.
The impact of this regulatory clarity was swift and far-reaching. Ripple’s On-Demand Liquidity (ODL) service, which utilizes XRP for cross-border payments, reported an impressive $1.3 trillion in transactions in the third quarter of 2025. This milestone highlighted the real-world utility of XRP beyond mere speculation in trading. The increased adoption of XRP in the realm of financial infrastructure played a crucial role in driving up its market capitalization by almost $180 billion following the court ruling.
Institutional interest in XRP surged in response to the regulatory developments. The approval of the ProShares Ultra XRP ETF in July 2025 represented an important milestone, becoming the first U.S.-listed investment product for XRP. This signaled a broader shift towards institutional acceptance of the cryptocurrency. Furthermore, numerous applications for XRP-based ETFs were under consideration by major asset managers, with analysts predicting substantial institutional inflows ranging from $5 to $8 billion by the year’s end. The appeal of XRP as a digital commodity was becoming increasingly evident, balancing speculative allure with tangible use cases.
Ripple’s strategic acquisitions and expansions further solidified its position in the market. The acquisition of Hidden Road, a prime broker, for $1.25 billion in April 2025 was a strategic move that enhanced Ripple’s liquidity and institutional services. This acquisition, coupled with the expansion of RLUSD stablecoin and the XRP Ledger, positioned Ripple as a frontrunner in providing efficient and cost-effective financial solutions to institutional clients. The company’s steadfast focus on infrastructure development underscored XRP’s potential as a cornerstone of institutional crypto portfolios in the foreseeable future.
Looking ahead, the potential passage of the Clarity Act stands to catalyze further institutional adoption of XRP. This legislation could provide much-needed regulatory guidelines and pave the way for permissioned decentralized exchanges, mitigating compliance concerns for larger financial institutions. Analysts foresee the Clarity Act as a crucial step towards eliminating regulatory uncertainties and encouraging significant financial entities to integrate XRP into their operational frameworks. Moreover, the growing presence of crypto treasury firms, which hold substantial XRP reserves, could introduce scarcity dynamics that drive demand and price appreciation.
Notwithstanding these favorable developments, risks persist in the landscape. The approval of XRP-based ETFs remains uncertain, and regulatory shifts in global jurisdictions could introduce new uncertainties. Analysts caution investors to tread carefully and advocate for a diversified portfolio approach to navigate potential market volatility and risks stemming from the crypto treasury sector. While XRP stands on a strong footing with regulatory clarity, institutional infrastructure, and real-world utility, vigilance remains paramount in navigating the evolving crypto landscape.
