Ripple Earns Coinbase Listing, At Last. Does it Prove XRP is Not a Security?

February 26, 2019 08:20 UTC

For years, supporters of the Ripple blockchain network and its native cryptocurrency XRP have anticipated the listing of the asset on Coinbase, the largest digital asset exchange in the U.S.

Many investors have believed that the integration of XRP by Coinbase could be considered as a confirmation of regulatory clearance on the nature of the digital asset as a nonsecurity.

However, Jake Chervinsky, a government enforcement defense and securities litigation attorney at Kobre & Kim LLP said that there are too many variables to directly conclude XRP as a nonsecurity.

Why Did Coinbase Integrate Ripple (XRP) Now?

Like any other commercial business, it is in the interest of Coinbase to supplement the demand from investors in the cryptocurrency market with a well-structured and developed product.

On February 25, as CCN reported, Coinbase Pro, the professional cryptocurrency exchange operated by Coinbase, officially began the process of integrating XRP.

In an official announcement, the Coinbase Pro team said:

When XRP?? Now! XRP/USD, XRP/EUR, and XRP/BTC order books will soon enter transfer-only mode, accepting inbound transfers of XRP in supported regions. Orders cannot be placed or filled. Order books will be in transfer-only mode for a minimum of 12 hours.

Initially, the integration of XRP by Coinbase led to a strong 10 percent increase in the price of the asset.

Although XRP retraced substantially following the release of the announcement, in the past several hours, XRP has increased by an additional 3 percent against the U.S. dollar.

1-Hour Price Chart of XRP (Source: TradingView)

As seen in the short-term price trend of XRP, the integration of Ripple by Coinbase was well accepted by the Ripple community.

But, according to Jake Chervinsky, it is too early to determine whether the move by Coinbase demonstrates the company’s confidence that XRP is not a security.

Instead, the attorney explained that Coinbase likely sees the benefits of integrating XRP into the exchange outweigh potential negatives of the integration including possible legal risks.

He stated:

It’s tempting to speculate about the legal implications of Coinbase’s decision to list XRP, but there are too many variables at play to draw any solid conclusions.

The only reasonable inference is that Coinbase believes the benefits outweigh the costs (including legal risks).

Moreover, it is entirely possible that Coinbase is aggressively moving towards the integration of a variety of crypto assets to compete with Gemini, which as Chervinsky noted has been dedicated to operating with the vision of establishing itself as the “most regulated exchange” in the U.S. market.

Will XRP as a Nonsecurity Ever Be Confirmed?

Coinbase’s recent integration of XRP does not definitively show that the asset is nonsecurity.

On February 13, Judge Phyllis J. Hamilton of the U.S. District Court of California canceled a case management conference, opening up the possibility of the case moving back to state court or being delayed for an extended period of time.

Due to the complexity of the case, Chervinsky previously emphasized that the case could take years to be concluded.

“We are still looking at months or years until the case is resolved. But if you’re a Ripple supporter, you probably want the case to go on for a lot longer anyway. Your earliest hope for true victory is far off,” he said.

But, the decision of Coinbase to move forward with the listing of XRP despite the obvious legal risks involved in the process could lead other exchanges in the U.S. to integrate the asset in the future.

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