Ripple, the prominent blockchain company behind XRP, has recently shown a shift in its political affiliations, particularly with its support of Democratic presidential candidate Kamala Harris. This is a surprising move considering Ripple’s historical neutrality in U.S. elections and its contentious relationship with U.S. regulators, specifically the Securities and Exchange Commission (SEC). Ripple’s CEO, Brad Garlinghouse, praised Harris’ approach to digital assets during the D.C. Fintech Week event, calling it “most constructive.” This shift towards Harris comes at a time when Ripple is considering the possibility of launching an XRP exchange-traded fund (ETF) and dealing with the aftermath of its legal battle with the SEC under the Democratic administration. The article explores the reasons behind Ripple’s support for Harris, the implications for its future, and the controversy surrounding its political contributions.
In the past, Ripple has not been closely aligned with the Democratic Party, especially considering the SEC’s $1.3 billion lawsuit against the company during President Biden’s administration in 2020. However, in 2024, Ripple’s CEO and co-founder, Chris Larsen, made significant donations to support Harris, despite former President Trump’s efforts to court crypto supporters. This move puzzled many in the industry, as Trump was seen by some as more favorable towards cryptocurrencies. Garlinghouse defended Larsen’s decision, stating that Ripple encourages its employees to support candidates they believe are best for the country, emphasizing that this is more about pro-crypto policies than loyalty to a specific party. Garlinghouse believes the 2024 election is crucial for the future of the crypto industry and that either Harris or Trump winning would be an improvement over the Biden administration’s approach to digital assets. This has led to speculation about Ripple’s motives, especially considering its ongoing legal battle with the SEC.
Ripple’s relationship with Democrats, particularly the SEC, has been far from smooth. The SEC filed a lawsuit against Ripple in 2020, accusing the company of selling unregistered securities in the form of XRP. Although Ripple obtained a partial victory in July 2023 when a judge ruled that XRP sales to retail investors did not qualify as securities, the SEC has continued its legal pursuit. In August 2024, the SEC sought a $2 billion fine but was ultimately awarded a much smaller $125 million penalty. Ripple hailed this as a victory, but the SEC’s appeal has created ongoing uncertainty. These legal challenges have prompted Ripple to adopt a strategy of survival, which is reflected in its recent political moves.
Ripple’s recent political contributions have been anything but ordinary. In June 2024, Ripple’s Chief Legal Officer, Stuart Alderoty, made headlines with a sizable donation of $300,000 in XRP to Trump’s presidential campaign. Alderoty’s donation coincided with Trump’s shift towards a pro-crypto stance, which likely influenced his decision. Many believed that if Trump returned to the White House, he would appoint a more crypto-friendly SEC chair, which could benefit the industry. The broader crypto industry has also been heavily backing Trump, as indicated by the significant amount of campaign donations made to Republicans compared to Democrats.
Ripple’s dual strategy reflects the uncertainty surrounding the 2024 U.S. presidential election and its potential impact on the crypto industry. With political donations from crypto groups reaching $190 million for this election cycle, the stakes have never been higher. Ripple wants to ensure that it has a seat at the table, regardless of whether Trump or Harris becomes the next president.
In addition to its political contributions, Ripple is also eyeing the possibility of launching an XRP ETF. 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 actual cryptocurrency. Garlinghouse believes 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 the concerns raised by the SEC lawsuit. It would also enable Ripple to meet investor demand in a regulated and mainstream manner, boosting confidence in XRP and potentially driving up its price and liquidity.
Given the SEC’s resistance, Ripple’s political donations to both Harris and Trump may serve as a strategic hedge. By positioning itself favorably with either candidate, Ripple aims to secure approval for its XRP ETF, regardless of who wins the 2024 election.