Coinbase said it would cease trading XRP, the cryptocurrency that the US Securities and Exchange Commission sued last week, claiming it was truly a security.
Coinbase first listed XRP on its retail platforms in February 2019. From now on, XRP trading will “only reach its limits,” wrote Coinbase. It will be fully suspended on Tuesday, January 19, 2021 at 1 p.m. ET.
“We will continue to monitor legal developments related to XRP and update our customers as more information becomes available,” wrote Paul Grewal, Coinbase’s Chief Legal Officer, in a blog post shared in advance with CoinDesk.
Coinbase said that users’ XRP wallets “will continue to be available for receiving and withdrawal functions after the trading interruption.”
In particular, the exchange said it will continue to support an upcoming drop of Spark tokens to XRP holders. XRP is still supported by Coinbase Custody and in the Coinbase Wallet.
Coinbase declined to comment beyond its written statement.
The price of XRP on Coinbase rose from $ 0.28 to $ 0.24 in the first 20 minutes of the announcement. Since the SEC’s lawsuit was announced, the price of XRP has fallen more than 50%.
For Coinbase, the reason for dropping XRP as a traded asset was simple: with the company looking to go public, having a platform for something that might provide security would mean adding more paperwork so that retail customers can legally buy and buy sell a single cryptocurrency.
The SEC claimed last week that XRP is a security and that Ripple has been selling it for seven years without registering or applying for an exemption, raising $ 1.3 billion in the process. The litigation itself is just beginning, and litigation can last for years with Ripple battling the charges in court, as it has hinted at.
Coinbase is now the largest exchange for XRP and could serve as a platform for other platforms. On Friday, Bitstamp announced that it would cease XRP trading and deposits for all US customers on January 8th.
Similarly, San Francisco-based OKCoin announced its XRP suspension on Monday January 4th.
Exchanges that continue to list XRP without registering as a securities exchange with the SEC have potential consequences, including possible enforcement actions. However, should Ripple prevail, Coinbase can likely re-list XRP fairly easily.
Alex Kruger, a trader and analyst, said, “Crypto exchanges are not registered with the SEC (optional because there are many burdens and increased costs to register) so it is in their best interests not to trade in securities to offer. It’s for their protection, not their customers. “
Gabriel Shapiro, an attorney for Belcher, Smolen & Van Loo LLP, told CoinDesk earlier this week that the question of whether to delist any exchanges is complicated, both for business and legal reasons.
UPDATE (December 28, 22:54 UTC): Adds an XRP price reaction.
