Ripple, the prominent blockchain company behind XRP, has recently taken a more political stance, raising questions about its true intentions. CEO Brad Garlinghouse’s favorable comments about Democratic presidential candidate Kamala Harris at the D.C. Fintech Week event have caught attention. This is significant considering Ripple’s previous neutrality in U.S. elections and its complicated relationship with U.S. regulators, particularly the SEC.
The timing of Garlinghouse’s praise for Harris coincides with Ripple’s potential pursuit of an XRP ETF and its ongoing legal battle with the SEC under a Democratic administration. This raises the question of why Ripple is shifting towards Harris and what implications this may have for the company’s future. To understand this, it is important to examine Ripple’s political donations, its hopes for an XRP ETF, and the surrounding controversy.
Historically, Ripple has not been particularly aligned with the Democratic Party, especially considering the $1.3 billion lawsuit it faced from the SEC during President Biden’s administration in 2020. Yet, in 2024, Ripple CEO Chris Larsen has made bold statements and significant donations in support of Democratic candidate Harris. Garlinghouse, while maintaining Ripple’s neutral stance on the election, has praised Harris as “pro-technology” and highlighted her connections to Silicon Valley. He also suggested that both a Harris or Trump victory would benefit the crypto industry, which contrasts with his criticism of the current Biden administration’s approach.
The real surprise came when Larsen donated a substantial $10 million in XRP to Harris’ campaign, following an earlier donation of $1 million. This move was unexpected, especially considering Trump’s efforts to court crypto supporters. Many in the industry see Trump as a stronger crypto advocate due to his vocal support for digital assets. This led to confusion among some industry experts, including crypto venture capitalist Nic Carter, who called the donation “completely baffling.” However, 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 political party loyalty. Garlinghouse believes that the upcoming 2024 election is crucial for the future of the crypto industry, and regardless of the outcome, either Harris or Trump would improve upon what he views as the Biden administration’s “failed approach” to digital assets.
These political moves by Ripple have raised speculation about the company’s motives, especially considering its contentious relationship with the SEC. In 2020, the SEC filed a significant lawsuit against Ripple, accusing the company of selling unregistered securities in the form of XRP. This lawsuit, filed during Biden’s presidency, has cast a shadow over Ripple for years. While Ripple achieved 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 SEC sought a $2 billion fine, but was only 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. Just a few months ago, in June 2024, Ripple’s Chief Legal Officer Stuart Alderoty made headlines with a substantial $300,000 XRP donation 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, potentially benefiting the crypto industry. In fact, between April and June 2024, Trump’s fundraising efforts brought in over $118 million, including $4 million in cryptocurrencies such as Bitcoin, Ethereum, and XRP. Notable figures in the crypto industry, including Tyler and Cameron Winklevoss and BitGo CEO Mike Belshe, have also supported Trump, solidifying the industry’s alignment with the former president.
Despite Ripple’s seemingly divided loyalties, the broader crypto industry has heavily supported Trump. Data from AdImpact shows that crypto companies have spent 62% more on ads for Republicans than Democrats this year. PACs such as Fairshake have invested millions of dollars in election ads supporting GOP candidates compared to Democrats. This spending is targeted at 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 significant amounts from crypto-backed PACs.
Ripple’s dual strategy reflects the uncertainty surrounding the 2024 U.S. presidential election and its potential impact on the crypto industry. With crypto groups donating a total of $190 million for this election cycle, the stakes have never been higher. Whether Trump or Harris takes office in 2025, Ripple wants to ensure that it has a say in the matter. But what is the reason behind this?
An additional factor to consider is Ripple’s interest in an XRP ETF. Bitwise and Canary Capital have already filed for XRP ETFs, which would allow investors to gain exposure to XRP through a stock exchange without directly holding the cryptocurrency. Garlinghouse recently spoke to Bloomberg and referred to an XRP ETF as “inevitable,” noting the growing demand from both retail and institutional investors to access this asset class. Approval of an XRP ETF would not only validate XRP as a legitimate financial asset but also address the concerns raised by the SEC lawsuit. An ETF would 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 donations to both Harris and Trump could be a strategic move to position the company for approval of its long-awaited XRP ETFs, regardless of the election outcome.