The popular exchange BItstamp has said it will discontinue XRP trading for US customers. This comes on the heels of an SEC announcement that the regulator is pursuing legal action against Ripple Labs.
Halting XRP trading
XRP haters continue to have their day in the sun as yet another crypto exchange halts trading. After Ripple revealed that it was facing a lawsuit from the US Securities and Exchange Commission (SEC) for illegal securities sales, XRP’s price plummeted.
Soon after, a number of exchanges began delisting XRP or halting trading for US customers. OSL, CrossTower, and Beaxy exchanges all stopped XRP trading. The crypto hedge fund Bitwise removed XRP from its portfolio. All cited the SEC lawsuit as the reason.
Then, Bitstamp threw in its towel as well and announced an end to XRP trading for its US customers. Bitstamp is the largest exchange to do so to date.
On their website, the company announced they would halt all trading and deposits for XRP on Jan 8, 2021 at 9 PM UTC. US customers will be able to withdraw XRP thereafter, and citizens of other countries will not be affected.
Bitstamp, which has a $500 million daily trading volume, says they will keep track of the situation and adapt accordingly.
The very best security
Ripple Labs announced that they were expecting a lawsuit from the SEC the day before the information was officially released by the authorities. The Feds accuse CEO Brad Garlinghouse and co-founder Chris Larsen of carrying out an “ongoing” illegal securities sale.
In the US, securities must be registered with the proper authorities, usually the SEC, to be traded publicly. Some non-security assets are things like property and currency. Ripple Labs is insisting that XRP, which is designed to streamline money transfers, is a currency, not a security.
Meanwhile, when the Fed comments on a cryptocurrency’s status, they usually designate them as property. Some frustrations arise with phenomena like proof-of-stake, in which small block rewards could each be considered separate taxable events. There is some pushback in congress to try and smooth out these inconsistencies.
In the past, the US government suggested that it would consider Bitcoin (BTC) and Ethereum (ETH) to not be securities. In 2019 Larsen and Garlinghouse wrote an open letter pleading with the US government to slow down regulation.
After Ripple’s announcement of the upcoming lawsuit, the price fell 36% in one day. Ripple had been quiet through the summer when many other cryptocurrencies saw their prices pump. Finally, ahead of a very large airdrop of the Flare Network’s Spark tokens, the price rose to a high of $0.79. Spark tokens help implement contracts on the XRP chain, and each XRP holder was promised an airdrop after the Dec 11, 2020 snapshot. Then the lawsuit news arrived.
Despite a short bounce around $0.27, XRP is still struggling to stay afloat above $0.30. With Bitcoin breaking $25,000 and gaining most of the attention, it may be hard for the #3 cryptocurrency to attract the tender love and care of investors it needs.