The cryptocurrency community has found a way to fight the actions of the US Securities and Exchange Commission. What is it?

February 12, 2023 by cryptobreak

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The day before, Coinbase General Counsel Paul Grewal said Coinbase’s steaking would not be affected by the Securities and Exchange Commission’s (SEC) request to shut down the steering program on the Kraken exchange. Staking on Kraken is “essentially a revenue product”, he said, while staking on Coinbase is “fundamentally different and cannot be considered an offering of securities”. Apparently, representatives of the blockchain community know how to respond to such bizarre decisions from the regulator. That said, Coinbase executives are clearly not going to like this method.

As is traditional, let's start with the backstory. One of the main topics of the week was the shutdown of the Kraken cryptocurrency exchange. This was due to a requirement from the US Securities and Exchange Commission, which saw the process as a securities offering.

It is worth noting that the restriction applies to so-called SaaS platforms that offer staking as a service. In this case, exchanges promise a certain return on investment, but they themselves can use the users' money in any way they wish. That is what the regulator does not like: the commissioners want the activity of stock exchanges and other similar platforms to be strictly limited.

SEC building

But the blockchain community is not happy with what is happening, as they see the SEC’s actions as unjustified. Still, the regulator does actively fine cryptocurrency companies, but at the same time does not want to engage in creating clear norms for their activity. So crypto enthusiasts have found a way to respond to the SEC.

What will happen to the XRP token?

Coinbase CEO Brian Armstrong has backed Kraken in the exchange’s confrontation with the SEC and promised to fight for users’ economic freedom. This has raised an unexpected question in the cryptocurrency community – what about XRP?

Recall that in 2020, Coinbase delisted the XRP token from its platform amid Ripple’s lawsuit against the SEC. At the time, the SEC filed a lawsuit against Ripple for allegedly placing the equivalent of $1.3 billion in unlicensed securities. In other words, the problem here is an old one: the US regulator sees some cryptocurrencies and tokens as securities, which causes problems for their developers. As this particular case shows, the Commission has been unable to prove their case in court for more than two years.

So, is the “desire for freedom” that Armstrong claimed a prerequisite for the return of the token to the exchange? Here’s Armstrong’s message, which has generated the most discussion in the cryptocurrency community.

We will continue to fight for economic freedom – that is our mission at Coinbase. Some days, being the most trusted brand in crypto means protecting our customers from excessive government interference.

Brian Armstrong’s tweet

The tweet has garnered a lot of comments. Here’s one posted by a user nicknamed illneal.

Is the XRP delisting also a great example of how Coinbase protects users from excessive government interference?

The delisting of XRP from Coinbase was a kind of protection for a major cryptocurrency exchange from possible repercussions. Still, if the US Securities and Exchange Commission had been able to prove that XRP is a security, then US cryptocurrency platforms could also have had problems due to the proliferation of the token. And with the regulator now actively hampering the digital asset industry, the blockchain industry wants to see companies retaliate.

The logo of cryptocurrency exchange Coinbase

According to Cointelegraph’s sources, the #relistXRP hashtag has also begun to trend on Twitter, with users demanding that XRP appears again among available trading pairs on Coinbase.

In doing so, the blockchain community believes that Coinbase will be able to mess with the Securities and Exchange Commission. In addition, it will also send a message to the regulator that its actions are sometimes illogical and detrimental to the digital asset industry in the US market.

Another CGGRADED account posted the following tweet with the hashtag mentioned.

If Conbase really wanted to show that they were standing up to the SEC, they’d just bring back XRP. I mean, seriously, it wasn’t even declared a security! Coinbase and Brian Armstrong are just a BUCK OF TRUCKS.

Note that XRP has indeed not been recognised as a security. However, the prospect of such a thing still lingers, so Coinbase is unlikely to take risks in this way. That said, it is important to note that many trading platforms continue to support XRP trading.

Cryptocurrency enthusiasts have also referred to the recent legal victory associated with the LBRY Credits (LBC) project, drawing parallels with XRP. On 30 January 2023, the US Securities and Exchange Commission officially recognised that the sale of LBRY tokens does not constitute an offer of securities. Which means platforms like Coinbase can provide LBC trading without any legal problems.

Coinbase CEO Brian Armstrong

The post In support of XRP also appeared first on LBRY’s official Twitter account. But could this change Coinbase executives’ minds about the token’s prospects? Probably not. A new XRP listing should not be expected until at least the regulator changes its policy on the crypto industry. That said, Ripple representatives expect to end the litigation in 2023.

We believe that such a strategy is unlikely to be appropriate for cryptocurrency exchange Coinbase and other trading platforms. It could be fraught with significant fines, which are unrewarding to win in a bearish trend with diminished returns for companies. And as was evident the day before, the regulator is happy to hand them out. So the blockchain community clearly needs to come up with something more realistic.