Coinbase said it would suspend trading in XRP, the cryptocurrency that the U.S. Securities and Exchange Commission sued last week, claiming it is actually a security.
Coinbase first listed XRP on its retail-oriented platforms in February 2019. As of now, XRP trade “will just go over the limit,” Coinbase wrote. It will be fully suspended on Tuesday, January 19, 2021, at 1 pm ET.
“We will continue to monitor legal developments related to XRP and update our clients as more information becomes available,” wrote Paul Grewal, Coinbase legal director, in a blog post shared in advance with CoinDesk.
Coinbase said users’ XRP wallets “will remain available to receive and withdraw functionality after trading is suspended”.
Notably, the exchange said it will still support an aerial launch of Spark tokens for XRP holders. XRP will still be supported by Coinbase Custody and the self-care Coinbase Portfolio.
Coinbase declined to comment beyond its written statement.
The price of XRP on Coinbase plummeted from $ 0.28 to $ 0.24 in the first 20 minutes after the announcement. Since the SEC filing was announced, the price of XRP has dropped by more than 50%.
For Coinbase, the reason for dismissing XRP as a traded asset was simple: as the company seeks to go public, being a platform for something that is potentially a security would mean adding more paperwork simply so that customers of retailers to buy and sell a single cryptocurrency.
The SEC claimed last week that XRP is a security and that Ripple has been selling it without registering or seeking an exemption for seven years, raising $ 1.3 billion in the process. The legal battle itself is just beginning, and the litigation could take years if Ripple fights the charge in court, as he indicated he would.
Coinbase is now the largest exchange to operate in XRP and can serve as a thermometer for other platforms. On Friday, Bitstamp announced that it would stop trading and XRP deposits for all U.S. customers on January 8.
Similarly, OKCoin in San Francisco announced its XRP suspension on Monday, starting January 4.
Exchanges that continue to list XRP without registering as a stock exchange with the SEC face potential consequences in the future, including possible enforcement actions. However, if Ripple prevails in your defense, Coinbase can probably reclassify XRP quite easily.
Alex Kruger, a broker and analyst, said: “Crypto exchanges are not registered with the SEC (optionally, as registration entails many charges and increased costs) and therefore it is in your interest not to offer securities trading. It is for their protection, not their customers. “
Gabriel Shapiro, a lawyer for Belcher, Smolen & Van Loo LLP, told CoinDesk earlier this week that the question of whether exchanges should be removed from the list is complicated, both in commercial and legal terms.
UPDATE (December 28, 22:54 UTC): Adds the XRP price reaction.