Why has Ripple become a subject of interest
Ripple, the prominent blockchain company behind XRP, has recently shown a shift in its political engagement, raising questions about its motives. CEO Brad Garlinghouse made notable remarks praising Democratic presidential candidate Kamala Harris during the D.C. Fintech Week event. This is surprising considering Ripple’s historical neutrality in US elections and its strained relationship with US regulators, particularly the SEC. However, this shift coincides with Ripple’s interest in launching an XRP ETF and its ongoing legal battle with the SEC under a Democratic administration. So, what is the reasoning behind Ripple’s support for Harris, and what implications does it have for the company’s future?
Traditionally, Ripple has not been closely aligned with the Democratic Party, especially after facing a $1.3 billion lawsuit from the SEC under President Biden’s administration in 2020. Yet, in 2024, Ripple CEO Chris Larsen has made bold statements and significant donations in support of Harris, despite former President Trump actively courting crypto supporters. This move has puzzled many in the industry, as Trump is seen by some as more supportive of cryptocurrencies. However, Garlinghouse defends Larsen’s decision, stating that Ripple encourages its employees to support the candidate they believe is best for the country, emphasizing the importance of pro-crypto policies over political party loyalty. Garlinghouse believes that the 2024 election is critical for the future of the crypto industry, and regardless of the winner, either Harris or Trump would be an improvement over the Biden administration’s approach.
Ripple’s relationship with Democrats, particularly the SEC, has been turbulent. In 2020, the SEC filed a lawsuit against Ripple, accusing the company of selling unregistered securities in the form of XRP. Although Ripple secured a partial victory in July 2023 when a judge ruled that XRP sales to retail investors did not qualify as securities, the SEC has not backed down. In the latest ruling in August 2024, the regulator sought a $2 billion fine but was awarded a much smaller $125 million penalty. Ripple celebrated this as a victory, but the SEC’s ongoing appeal continues to create uncertainty.
Ripple’s recent political moves have been far from ordinary. In June 2024, Ripple’s Chief Legal Officer, Stuart Alderoty, made headlines with a substantial $300,000 XRP donation to Trump’s presidential campaign. This donation coincided with Trump’s shift towards a pro-crypto stance, leading many to believe that a return to the White House would result in a more crypto-friendly SEC chair, benefiting the industry. In the same period, Trump’s fundraising efforts brought in over $118 million, including $4 million in cryptocurrencies like Bitcoin, Ethereum, and XRP. Notable figures in the crypto industry, such as the Winklevoss twins and BitGo CEO Mike Belshe, have also backed Trump, highlighting the industry’s alignment with the former president.
Despite Ripple’s seemingly divided allegiances, the broader crypto industry has heavily supported Trump. Data from AdImpact reveals that crypto companies have spent 62% more on ads for Republicans than Democrats this year. PACs like Fairshake have invested millions of dollars in election ads supporting GOP candidates. This spending is concentrated in key House races in states like New York, Nevada, and California. For example, Southern California Republicans David Valadao and Michael Garcia, who are in tight races, have received substantial support from crypto-backed PACs.
Ripple’s dual strategy reflects the uncertainty surrounding the 2024 US presidential election and its potential impact on the crypto industry. With crypto-related political donations reaching $190 million for this election cycle, the stakes have never been higher. Whether it is Trump or Harris in the Oval Office in 2025, Ripple is determined to have a say in the industry’s future. But what is the underlying motive?
One possible explanation for Ripple’s recent donations to both Harris and Trump is a strategic maneuver. Bitwise and Canary Capital have already filed for XRP ETFs, which, if approved, would allow investors to gain exposure to XRP through a stock exchange without owning the cryptocurrency directly. Garlinghouse has stated that an XRP ETF is “inevitable” due to growing demand from retail and institutional investors. The approval of an XRP ETF would validate XRP as a legitimate financial asset and address concerns raised by the SEC lawsuit. It would also allow Ripple to meet investor demand in a regulated, mainstream manner, boosting confidence and potentially increasing the price and liquidity of XRP.
In light of the SEC’s resistance, Ripple’s donations to both Harris and Trump can be seen as a strategic hedge. By positioning itself to benefit from either candidate’s favor, Ripple aims to secure approval for its long-awaited XRP ETF, regardless of the 2024 election outcome.
