What happens when cryptocurrency once located as a regulator-friendly alternative to Bitcoin receives heat from regulators? XRP is for finding exchanges that trade.
Whether US-based cryptocurrency exchanges will delist XRP based on claims by the Securities and Exchange Commission (SEC) will have to consider whether there is unregistered security issued by Replay Labs to raise funds.
These exchanges have a major coinbase, which, in addition to the generalities of listing XRPs, also seeks the approval of the SEC to make its shares public and allow retail investors to trade them. If the SEC prevails in its litigation, the XRP can be classified as a security, i.e. under U.S. law whatever it offers to trade must be registered as a securities exchange.
It is also possible that the SEC’s victory will destroy the value of XRP as regulators seek to prevent Ripple from selling more tokens, and for Ripple, CEO Brad Garlinghouse and chairman Chris Larson do so to discredit their profits, pay bias interest and pay civil penalties.
While some exchanges, market makers and funds have begun to list XRP or have begun to exit positions and transactions from cryptocurrency, it may not be a black-and-white question for large exchanges.
Anthony Tu-Sekin, a partner at law firm Seward and Kisel LLP, told Sikneddesk that trading platforms like Siknabase are “between a rock and a hard place.”
“They can continue to list XRP based on their previous analysis that XRP is not security, with the hope that the court will find that XRP is no security.” He said. “Or it could take ‘remedial’ actions, such as restricting the trade of lets held by U.S. individuals, or completely shutting down its exchange.”
These scenarios are already covered by the terms of the exchanges ’service policy, he said.
Gabriel Shapiro, a lawyer for Bencher, Smolen and Wen Lu LLP, said delisting exchanges like Sinbase would be “crazy not to consider”. However, considering cryptocurrency, it’s not really like delisting – or delisting.
“They have to think – not just from a business perspective but also from a legal one – what kind of example they are setting,” he said. “If they delist someone [cryptocurrency] Just because a regulator is accused of being safe, what happens next? Have you authorized the SEC to simply remove anything from your platform? [it makes] Allegation? ”
On that basis, delisting of digital assets may not be the best thing for the exchange’s customers, Shapiro said.
“It simply came to our notice then [Coinbase] Just deleting and, personally, if I were that I don’t think I would delete unless I had something more solid to draw attention to, ”he said.
A Synbase spokesperson declined to comment for this article.
What can happen
Coinbase in particular is in a unique position due to its upcoming initial public offering (IPO) or direct listing. It has already filed an S-1 in its secrecy, a form companies use to register their shares as securities. The SEC can give the company feedback on how it views potential risk factors or other aspects of its operations.
Last week, Shapiro told Sikkodesk that this must force companies to take some action. While he noted that he did not believe the SEC would explicitly ask Sikkobes to delist XRP, the agency could say that not delisting XRP could be a risk factor.
“You could say, ‘In your risk factors, you have not properly explained to your investors in your IPO how you have allowed XRP and others to trade on Synbase… You need to be really clear about that … Then come to Synbase, because you have been warned. ” He said.
It may then decide to delist XRP based on this feedback, or it may even breach its IPO ambitions if there is too much compliance.
What Cinbase can’t do is pretend to be unaware of how the SEC views XRP, Tu-Sekin said. The position of the agency is clear.
The SEC appears confident about its opportunities, and is a helpful example in its cases against Telegram and Kick, Shapiro said.
“I think we all suspect that there will be a strong case. But I don’t think we understand the extent to which Ripple has entered into a market-making agreement,” he said of the allegations in the SEC’s complaint.
