Ripple Labs’ XRP is the third-largest cryptocurrency in the world by market cap. Now, CEO Brad Garlinghouse is asking Coinbase — one of the largest digital exchanges in the U.S. — to list the currency on its platform.
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Coinbase has been very careful not to list any currency it thinks might classify as a security. The hoopla surrounding Ethereum and the U.S. Securities and Exchange Commission’s potential to view it as a security has led to a few raised eyebrows over the last week, though ultimately, the decision was made that Ethereum was too decentralized to be considered a security for SEC purposes.
However, XRP’s situation is somewhat different. Ripple Labs was recently hit with a class action lawsuit filed in a San Francisco superior court by Ryan Coffey, an investor in XRP. The suit claims that because of the way XRP is handled and distributed, and thanks to comments made by the SEC in the past, XRP is, and always has been, a security, and is in violation of federal securities laws. If deemed a security, Coinbase would be wise to continue to shun XRP.
The suit is unique in the sense that most lawsuits within the cryptocurrency space largely revolve around fraudulent activity and initial coin offerings (ICOs). A ruling in favor of the plaintiff(s) may have repercussions on the trading activities of other coins or how they’re classified.
As Ripple works to fix its growing list of ailments, CEO Garlinghouse spoke to an enthusiastic crowd on Thursday at the CB Insights Future of Fintech conference in New York City. There, he urged Coinbase to consider XRP among the coins it’s looking to list on its platform.
“As we solve problems at scale for institutions, I think it’s in Coinbase’s best interest to participate in that.”
Garlinghouse’s arguments were as follows:
“If Ripple, the company, shut down tomorrow, the XRP ledger would continue to operate. It’s open-source, decentralized technology that exists independent of Ripple. The people buying XRP – they don’t think they’re buying shares of Ripple. There’s a company called Ripple; we are a private company. We have investors, but buying XRP doesn’t give you ownership of Ripple. It doesn’t give you access to dividends or profits that come from Ripple. XRP is solving a problem; there’s no utility in a security.”
Critics took issue with Garlinghouse’s words, however, stating that the main problem with XRP is that Ripple still owns more than half of the coins in existence, which means it is not truly decentralized and could therefore find itself entering “security territory”.
Have your say. Do you think Coinbase should list XRP? Post your comments below.
Images via Pixabay
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