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More VideoDec 30, 2021
Olga Kharif, Bloomberg News
Bitcoin reaches new high, set for strongest monthly gain since 2019
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XRP continued its plunge after Coinbase became the latest U.S. crypto exchange to remove the world’s fourth-biggest coin in the wake of an SEC lawsuit against Ripple Labs Inc.
XRP tumbled 37 per cent Tuesday, bringing its drop to 60 per cent in the week since securities regulators accused Ripple of issuing more than US$1 billion in unregistered tokens. Coinbase said Tuesday that it will fully suspend trading XRP on Jan. 19, but will continue providing custodial services for clients.
Customers will find it increasingly difficult to trade XRP after the largest exchange joined Bitstamp in delisting the token. Coinbase customers can move it to another exchange, but it is growing more likely that the regulatory challenge will lead other U.S.-based venues to follow suit. Last week, the Bitwise 10 Crypto Index Fund (ticker BITW) liquidated its position in XRP, which comprised 3.8 per cent of its holdings.
“This is obviously bad for XRP across multiple dimensions: fewer potential buyers, and lower overall liquidity. For XRP to work as Ripple intends, XRP needs to be very liquid, so this particularly harmful,” said Kyle Samani, co-founder of Multicoin Capital.
The Securities and Exchange Commission said in last week’s suit that Ripple raised more than US$1.4 billion through the sale of XRP without first registering it as a security with the agency, creating “an information vacuum” that mislead investors. San Fransisco-based Ripple has denied the allegations.
“The SEC has introduced more uncertainty into the market, actively harming the community they’re supposed to protect,” Ripple said in a statement on its website. “It’s no surprise that some market participants are reacting conservatively as a result. We’ll be filing our response in a few weeks to address these unproven allegations.”
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As an expert in the field of finance and investment, I bring a wealth of knowledge and experience to the discussion on the recent developments in the cryptocurrency market, particularly the situation surrounding XRP and the SEC lawsuit against Ripple Labs Inc.
The article you provided discusses the impact of Coinbase's decision to remove XRP, the world's fourth-largest cryptocurrency, from its platform following the Securities and Exchange Commission (SEC) lawsuit against Ripple Labs Inc. This move has led to a significant decline in XRP's value, with a 37% drop in a single day and a total decline of 60% in the week following the regulatory action.
Now, let's break down the key concepts mentioned in the article:
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XRP (Ripple): XRP is a cryptocurrency created by Ripple Labs Inc. It's designed for fast and cost-efficient cross-border payments. The article highlights the adverse effects on XRP due to the SEC lawsuit, which accuses Ripple of raising over $1.4 billion through the sale of unregistered XRP tokens.
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Coinbase: Coinbase is one of the largest cryptocurrency exchanges in the United States. The article notes that Coinbase has decided to fully suspend trading of XRP on its platform starting January 19, adding to the challenges faced by XRP holders and potentially reducing liquidity for the cryptocurrency.
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SEC Lawsuit: The Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs Inc., alleging that the company conducted an unregistered securities offering by selling XRP. The SEC claims that Ripple's actions misled investors, creating uncertainty in the market.
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Bitstamp: The article mentions that Coinbase joined Bitstamp in delisting XRP. Delisting means removing a cryptocurrency from a trading platform. This can have significant implications for the affected cryptocurrency, including decreased liquidity and accessibility.
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Bitwise 10 Crypto Index Fund (BITW): The article notes that the Bitwise 10 Crypto Index Fund liquidated its position in XRP, comprising 3.8% of its holdings. This move by a crypto index fund reflects a broader trend of institutional investors adjusting their portfolios in response to regulatory challenges faced by specific cryptocurrencies.
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Regulatory Challenges: The regulatory challenges faced by XRP, as highlighted in the article, have resulted in a negative impact on its market performance. Regulatory uncertainty can lead to decreased investor confidence and liquidity issues for the affected cryptocurrency.
In summary, the developments discussed in the article showcase the interconnected nature of cryptocurrency markets, regulatory influences, and the potential consequences for specific digital assets like XRP. As an enthusiast and expert in the field, I emphasize the importance of staying informed about regulatory developments and their potential impact on the cryptocurrency landscape.
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