Coinbase announced it will suspend trading of XRP, the cryptocurrency central to a U.S. Securities and Exchange Commission (SEC) lawsuit against Ripple Labs. The SEC alleges XRP is an unregistered security, prompting Coinbase and other exchanges to reevaluate their listings.
Key Details of the Suspension
Timeline:
- Limit-only trading begins immediately.
- Full suspension takes effect on January 19, 2021, at 1 p.m. ET.
- Wallet functionality: Users can still withdraw or deposit XRP after the suspension.
- Spark token airdrop: Coinbase will support the distribution of Spark tokens to XRP holders.
👉 How does the SEC’s classification impact other cryptocurrencies?
Market Reaction
XRP’s price plummeted 16% within an hour of Coinbase’s announcement, compounding a 50% drop since the SEC lawsuit was filed. On Coinbase, XRP fell from $0.28 to $0.24 shortly after the news broke.
Why Exchanges Are Delisting XRP
Legal Compliance:
- The SEC’s claim that XRP is a security forces exchanges to register as securities platforms or delist.
- Coinbase’s upcoming IPO plans make compliance a priority.
Industry Ripple Effect:
- Bitstamp halted XRP trading for U.S. customers on January 8, 2021.
- OKCoin suspended XRP trading effective January 4, 2021.
👉 What are the long-term implications for crypto regulation?
Legal and Business Implications
- Ripple’s defense: The company vows to fight the SEC’s charges, potentially prolonging litigation for years.
- Exchange risks: Platforms continuing to list XRP without SEC registration face enforcement actions.
Expert Perspectives
Alex Kruger, Crypto Analyst:
"Exchanges avoid offering securities to bypass SEC registration burdens—it’s self-protection, not customer protection."
Gabriel Shapiro, Attorney:
"Delisting involves complex legal and business trade-offs."
FAQs
1. Can I still withdraw XRP from Coinbase after the suspension?
Yes, wallet functionality remains for deposits and withdrawals.
2. Will Coinbase relist XRP if Ripple wins the case?
Likely, as regulatory clarity would reduce compliance risks.
3. How does this affect other cryptocurrencies?
The SEC’s action signals heightened scrutiny for tokens with centralized governance.
4. What happens to my XRP during the Spark airdrop?
Coinbase will support the airdrop; you’ll receive Spark tokens if you hold XRP.
5. Why did XRP’s price drop so sharply?
Market panic over reduced liquidity and regulatory uncertainty.
6. Are other exchanges delisting XRP?
Yes, including Bitstamp and OKCoin, with more potentially following.
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