Ripple has a conundrum.
The startup controls the world’s 3rd-largest cryptocurrency, XRP. Many banks have signed onto its network and then bought equity stakes in its business, which wants to redo how money moves around the world. However when it comes to getting a listing for XRP on 2 of the top cryptocurrency exchanges in the country, Ripple hasn’t been able to cinch the deal.
It isn’t for A Lack of Trying To.
In 2017, the San Fran-based co suggested paying incentives to the venues, Coinbase & Gemini, according to five people with direct knowledge of the matter, who asked not to be identified as a source in disclosing private information.
For all the hoopla surrounding Ripple these last few years, its absence on markets like Coinbase is notable.
By tempting exchanges with money, Ripple signaled that its future success hinges in part on getting XRP listed on the top cryptocurrency trading venues.
But there’s been major resistance in the effort: U.S.A officials have warned unlicensed exchanges not to list tokens that could be deemed securities. XRP’s control by a single company has fueled speculation it could fall under that designation.
Also In 2017, a Ripple exec asked whether a One million dollar cash payment could influence Gemini to list XRP, according to sources close to CBNN. This followed other attempts by Ripple to get Gemini to add XRP token, exploring strategies like paying out “rebates” as well as covering related costs, the anonymous source said.
During early stage talks with Coinbase last spring, Ripple said it would be willing to lend the exchange over than $100 million worth of XRP to begin letting members trade the asset, according to a person privy to that discussion.
Ripple, without placing things in writing, reportedly told Coinbase it could pay back the loan either in dollars or XRP token.
It’s not unusual to pay for a cryptocurrency listing these days. Costs for this range from $1 million “for a ‘reasonably regarded’ token, to $6 million for an opportunity to get speedy liquidity,” according to a report from Autonomous Research Corp, which added that the figures are based on conversations among market participants and are not precise.
Few things have propelled XRP’s price more in recent years than speculation that the digital token is set to “graduate” to a U.S.A exchange, which now face stricter regulatory purview than markets based in some other parts of the world.
A U.S.A listing would also cement XRP’s standing among the chiefs of cryptocurrency such as ETH, Litecoin, and Bitcoin, the most popular cryptocurrencies currently..
To its fans, XRP is a valuable link between the world of banking and to digital currencies that comes with the backing of a Silicon Valley tech co.
XRP token is designed to revolutionize how banks move funds across borders, making transactions faster in the process. Ripple corp uses incentives to entice market makers to trade XRP and periodically sells its digital token to institutional investors as well, according to the website. While the token does not represent an ownership stake in Ripple, the concern is the close relationship might still lead regulatory oversight to deem XRP a security. The authorities are still clarifying which tokens deserve that designation.
If XRP token is classified officially as a security, it would be removed from the largely unregulated “Wild West” of cryptocurrencies and thus become subject to requisites similar to those that govern assets like stocks.
Based on Ripple’s success in gaining new users as well as the fervent speculation it would be listed in the U.S.A, XRP shot up more than fourteen times in value between December and early January. This was before Coinbase debunked speculation that it had decided to offer XRP on its market. Another big surge came on March 5th, after CNBC scheduled Coinbase Chief Operating Officer Asiff Hirji and Ripple CEO Brad Garlinghouse to appear on the same program the next day, setting off quick speculation that they were about to announce a partnership.
Paying for a listing *could be* perfectly legal, given that traditional U.S markets charge such fees, said Jesse Overstreet, a lawyer at Clifford Chance. However things could get complicated if a digital token were later regarded to be an unregistered security, he said. In such a case, both the exchange and/or issuer could face penalties, he said.
Companies are currently required to pay for listings on the largest U.S.A stock exchanges. They also must meet and then maintain listing requirements. For instance, Nasdaq Inc.’s stock markets can charge annual listing fees ranging from $41,000 to $195,000, according to the rule book.
Coinbase & Gemini limit the cryptocurrencies that trade on their respective exchanges. Gemini users can solely trade Bitcoin and Ether, though the Winklevoss brothers said last month that they want to expand to others such as Litecoin and Bcash. Coinbase now has Bitcoin, Ether, Bitcoin Cash(bcash), and Litecoin and restated on March fifth that it hasn’t decided whether it will add new coins.
The Securities and Exchange Commission has said that platforms serving as trading venues for virtual assets deemed to be securities will need to register with the agency as a national exchange, or qualify for an exemption. The regulator also subpoenaed firms/individuals behind initial coin offerings it believes might be breaking the law, a person with direct knowledge of the matter said earlier this year. An SEC spokesman declined to comment to us on the regulatory agency’s view of XRP.
The SEC’s warnings have however resonated in the financial industry. In March this year, the Winklevoss twins submitted a proposal for a regulatory body to govern crypto-currency markets and the custodians.