2018-8-7 22:40 |
Why Won’t Coinbase and Other Exchanges List Ripple’s XRP?
Ripple (XRP) is like the black sheep of the crypto community. Purists claim it’s not a real cryptocurrency because it isn’t decentralized. Major exchanges like Coinbase refuse to list it.
Despite the criticism, however, Ripple’s token, XRP, is one of the largest cryptocurrencies in the world. Short-term market movements aside, XRP is consistently in the top 4 or 5 cryptocurrencies by overall market cap. With the third largest market cap of all cryptocurrencies, XRP is clearly loved by investors – so why won’t major American crypto exchanges like Coinbase and Circle list Ripple?
The lack of XRP listings has angered Ripple investors. Cryptocurrency purists, meanwhile, continue to call XRP a banker’s coin. XRP’s investors, on the other hand, see it as a practical solution to the problems faced by the global banking world. Ripple has already formed partnerships with multinational banks while outperforming other cryptocurrencies. From an outsider’s standpoint, it seems bizarre that XRP isn’t listed on major exchanges.
So what’s the real reason behind Coinbase’s decision to not list XRP? Let’s get to the bottom of this issue.
Advocates of Decentralization Are Against RippleFirst and most importantly, advocates of decentralization have issues with Ripple. These advocates, as BraveNewCoin explained, “see the cryptocurrency as an imposter – representing all the problems of centralisation and the current financial system, but packaged as an altcoin.”
It’s true: Ripple’s governance system is vastly different than bitcoin and other decentralized cryptocurrencies.
Ripple is controlled by a private, centralized governance group. That group launched Ripple with an enormous pre-mine. That pre-mine means that the group can give XRP to whomever they want. Ripple reportedly offered Coinbase a loan of over $100 million in XRP in exchange for listing the token on the exchange, although Coinbase declined the offer.
Ripple, meanwhile, insists XRP is fully decentralized.
Ripple Goes Against the Digital Asset Framework of Coinbase and CircleRipple’s centralization goes against the principles of exchanges like Coinbase and Circle. In fact, both of these major US-based exchanges have published “Digital Asset Frameworks” outlining the types of tokens to be listed on their platform.
Ripple’s XRP does not meet this framework – at least in the eyes of Coinbase and Circle.
One of the core principles of Coinbase’s framework is decentralization. Coinbase requires a token’s network to be “public, decentralized and enable trustless consensus.”
The same Digital Asset Framework also outlines how the exchanges approach securities. Namely, neither Coinbase nor Circle plan to list securities. Coinbase has its own Securities Law Framework that states assets on the exchange must not be classified as a security.
XRP Could Be Declared a SecurityThe centralization of Ripple’s XRP leads to another problem: in the eyes of regulators, XRP could be considered a security.
In fact, it could be argued that out of all the top 10 or 20 largest cryptocurrencies by market cap, XRP is the most likely to be declared a security. It’s a digital token issued by a centralized entity, and the value of the token rises and falls based on the performance of Ripple (the company).
We might not have to wait long for XRP to be declared a security. Ripple is embroiled in a series of lawsuits about whether or not XRP should be considered a security.
If XRP is considered a security, then it’s not the end of the world. However, it would mean that any exchanges that list XRP would be forced to abide by stricter regulations. Instead of selling digital tokens, they would be selling registered securities – something only licensed authorities can do.
Ultimately, XRP’s shaky legal status – understandably – makes it a hard sell for US-based exchanges wishing to avoid liability.
Coinbase is Considering Listing Stellar (XLM), Which is Based on Ripple’s CodebaseXRP’s problems are clearly linked to its questionable legal status and perceived centralization. How do we know this? Well, Coinbase is reportedly considering adding Stellar (XLM) to its exchange.
XLM is based on Ripple’s codebase but is far more decentralized.
Based on this, we can conclude that exchanges like Coinbase have issues with the decentralized nature of Ripple – not some other aspect of its codebase.
International Exchanges Happily List XRPRipple’s problems are mostly with US exchanges. Coinbase and Circle are two of America’s largest crypto exchanges, and neither exchange appears to have plans to touch XRP in the future.
The same can’t be said for international exchanges. XRP hasn’t faced setbacks in other parts of the world. Japanese exchange DMM Group, for example, has listed XRP since it launched. That exchange has twice the number of users as Coinbase – 27 million traders compared to Coinbase’s 13 million.
Nevertheless, the addition of western exchanges would be a huge boost to XRP.
Conclusion: XRP Could Be Listed on Coinbase and Others in the FutureIt’s important to remember that Coinbase, Circle, and other exchanges have not explicitly banned Ripple. They haven’t ruled out the possibility of listing Ripple in the future.
It’s also important to note that Ripple claims XRP is fully decentralized. They don’t see their token as a crypto outsider. They see it as a valuable member of the community solving problems faced by big banks. They also insist it’s not a security.
Ultimately, it remains to be seen if XRP will surmount these problems. For now, XRP remains the world’s third largest cryptocurrency by market cap with no signs of slowing down.
Feel free to read more about buying XRP or the latest news from Coinbase:
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