What happens once cryptocurrency is established as a regulator friendly alternative to Bitcoin? XRP trades are there to find trades.
US-based cryptocurrency transactions should consider whether to list XRP in the light of a Securities and Exchange Commission (SEC) case.
Foremost among these exchanges is Coinbase, which, in addition to the usual considerations in listing XRP, seeks SEC approval to take its shares publicly and allow retail investors to trade. If SEC prevails in its case, XRP can be classified as a security, i.e. it must be registered as a securities exchange for business under US law firms.
An SEC win could destroy the value of the XRP because the regulator wants to stop Ripple from selling tokens anymore, and Ripple, CEO Brad Carlinghouse and Chairman Chris Larson want to discredit their profits, pay unreasonable interest and pay civil fines.
During some transactions, Market makers And funds are already beginning to eliminate XRP or exit positions and transactions with cryptocurrency, which would not be a black and white question for large transactions.
Anthony Du-Chekin, a partner at law firm Seward & Gissel LLP, told CoinDesk that trading sites such as Goenbase are “between a rock and a hard place.”
“In the hope that the court will find that the XRP is not a security, they can continue to list the XRP based on a previous analysis that the XRP is not a security,” he said. “Or they can take ‘settlement’ measures, such as restricting the trade in wallets held by American individuals, or take it over their entirety.”
These scenes are already covered by the service policies of the exchanges, he said.
Belcher, Smolan & Van Lou LLP attorney Gabriel Shapiro said listing transactions like Coinbase would be “crazy not to consider”. However, the question in question is whether to actually delete – or not delete – cryptocurrency.
“They need to think – not just from a business perspective but legally – what kind of precedent they set,” he said. “If they remove one [cryptocurrency] What happens next time a controller accuses it of being a security? Have you given the SEC the right to remove anything from your platform? [it makes] An accusation? “
Shapiro said listing digital assets on that basis would not be large for transfer customers.
“It simply came to our notice then [Coinbase] Personally, if I were them, I don’t think I would delete them if I did not have something more convincing to point out, ”he said.
A Coinbase spokesman declined to comment on the article.
What could happen
Coinbase in particular is in a unique position due to the upcoming initial public offering (IPO) or direct listing. It has already filed its S-1 for confidentiality, a form companies use to register their shares as securities. The SEC can provide feedback on how it views potential risk factors or other aspects of its operations.
Last week, Shapiro told CoinDesk that this would force companies to take some action. Although he does not believe that SEC will explicitly tell Goenbase to remove XRP, the company may say that deleting XRP may be a risk factor.
“You may say, ‘You did not properly explain your risk factors to your investors in your IPO, how you allowed XRP and others to trade on Coinbase … you need to be really clear about that … come back to Coenbase, as you were warned, including us,’ He said.
Based on this feedback Coinbase may decide to remove XRP, or it may even remove its IPO aspirations if the compliance load is high.
Cohenbase cannot pretend to be ignorant of how SIC views XRP, Du-Chekin said. The agency’s position is clear.
SEC appears optimistic about its prospects and has useful role models from the lawsuits over Telegram and Kick, Shapiro said.
“I think we all suspect there may be a strong case, but I do not think we have realized the extent to which the ripple has entered into market-creating deals,” he said of the allegations in the SEC’s complaint.