Coinbase to Suspend XRP Trading Following SEC Suit Against Ripple
Coinbase said it will suspend trading of XRP, the cryptocurrency the U.S. Securities and Exchange Commission claimed last week is really a security.
Coinbase first listed XRP on its retail-facing platforms in February 2019. Starting now, XRP trading “will move into limit only,” Coinbase wrote. It will be fully suspended on Tuesday, Jan. 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,” Paul Grewal, Coinbase’s chief legal officer, wrote in a blog post shared in advance with CoinDesk.
Coinbase said users’ XRP wallets will “remain available for receive and withdraw functionality after the trading suspension.”
Notably, the exchange said it would still support an upcoming airdrop of Spark tokens to XRP holders. XRP will still be supported by Coinbase Custody and in the self-custodial Coinbase Wallet.
Coinbase declined to comment beyond its written statement.
For Coinbase, the problem keeping XRP as a traded asset was clear: As the company seeks to go public, becoming a platform for something that’s potentially a security would mean adding more paperwork so it can be legally allowed to let retail customers buy and sell this one 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 litigation might take years if Ripple fights the charge in court, as it has indicated it would.
Coinbase becomes the biggest exchange to act and could serve as a bellwether for other platforms. On Friday, Bitstamp announced it would halt XRP trading and deposits for all U.S. customers on Jan. 8.
Similarly San Francisco-based OKCoin acted earlier on Monday, announcing its XRP suspension for Jan. 4.
Coinbase – and other exchanges – that continue to list XRP without registering as a securities exchange with the regulator face potential consequences further down the line, including the specter of future enforcement actions. However, should Ripple prevail in its defense, Coinbase can likely re-list XRP fairly easily.
Alex Kruger, a trader and analyst, said, “Crypto exchanges are unregistered with the SEC (by choice, as registering carries on many burdens and increased costs) and thus it is in their best interest to not offer trading of securities. It is for their protection, not their customers’.”
Gabriel Shapiro, an attorney with Belcher, Smolen & Van Loo LLP, told CoinDesk earlier this week that the question of whether exchanges should delist is a complicated one, with both business and legal considerations.
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