Ripple, the startup that owns world’s third largest cryptocurrency and has some of the world’s major banks as stake holders, cannot get its token listed on the top U.S crypto exchanges, even with money on the table.
Ripple had been pretty active with striking deals with major financial institutes around the globe and allowing banks to buy equity stakes in its business, yet the San Francisco based startup couldn’t make its way to the top U.S cryptocurrency exchanges. From the way Ripple is dangling money, it seems like for Ripple, getting listed on venues like Coinbase and Gemini signals a great deal.
XRP is being controlled by a single company only and that’s what is concerning U.S exchanges as the U.S lawmakers have warned unlicensed exchanges not to add tokens that could be considered securities and unfortunately Ripple falls in the same category.
According to four people familiar with the matter, a Ripple executive suggested offering $1 million to Gemini last year, to persuade it to list XRP on its platform. Ripple also followed with other attempts to get Gemini to add XRP.
Moreover, the sources revealed, that last year Ripple was willing to lend Coinbase $100 million in XRP to get it offer XRP to its customers. Ripple even suggested Coinbase it can pay back the loan in either XRP or dollars.
Both Coinbase and Gemini turned down Ripple’s offer, said the people.
Addressing the matter and the accusations, Ripple spokesperson Emmalee Kremer said some of the information surfacing was inaccurate. She did not clarify which information she was referring to.
“Regardless, Ripple has always been transparent about our focus on building and growing a strong XRP ecosystem,” she said. “We want XRP to be the most liquid digital asset possible to enable faster, cheaper global payments.”
Coinbase and Gemini refused to comment on the matter.
A lot of rumors had been circulating since past few months that Ripple was set to be listed on a U.S exchange. Such news caused XRP price to surge a few times as getting listed on a U.S exchange would simply grant XRP the ranks among bigger participants in the market like Bitcoin.
We cannot deny that Ripple is a valuable link between the fiat financial system and digital currencies. XRP is revolutionizing the means by which banks transfer money across borders.
While XRP doesn’t represent an ownership stake in Ripple, their close relationship is still concerning for regulators which is making them deem XRP as a security. If say XRP is classified as a security, it will be removed out of the unregulated crowd of cryptocurrencies and will become subject to requirements similar to those that govern assets like stocks. And if it happens, then the exchanges offering XRP will have to do the same.
So, offering money to get listed on an exchange is legal as it is common in traditional market, according Jesse Overall, an attorney at Clifford Chance. However, things could get pretty messed up after a token turns out to be an unregistered security, said Overall. In that case both the digital token and the exchange will need to face penalties.
“Listing on an exchange is the integral part of the process of facilitating an unregistered, unlawful, illegal securities issuance to people who are not allowed to buy,” Overall said.
Exchanges let companies pay and get listed but only when they meet the exchange’s listing requirements.
Both Gemini and Coinbase limit the virtual currencies that are traded on their platforms. For instance, Gemini allows customers to trade only Bitcoin and Ether while Coinbase customers can trade Bitcoin, Bitcoin Cash, Ether and Litecoin.
The Securities and Exchange Commission (SEC) in U.S has ordered exchanges that offer cryptocurrencies deemed as securities to register with SEC as a national exchange or qualify for an exemption. A person having direct knowledge of the matter said earlier that the SEC also subpoenaed individuals and firms that offered coins it believed were law breaking. Hence, increasing the concerns exchanges have while adding support for a new digital asset.
Listing fees are pretty common in traditional securities markets however they are not in the crypto market. Dave Weisberger, CEO of CoinRoutes, a cryptocurrency data and order routing company noted the reason behind listing fees being so uncommon in the crypto space.
“In the equity space, listing fees have always historically been coupled with the notion of regulation,” whereas the virtual currencies are relatively unsupervised, he said.
Yet, the reason for doing it is pretty simple: a cryptocurrency issuer paying money for getting their token listed on an exchange “could make 100 times that payment by selling off those coins when it lists,” Weisberger said.