Coinbase, one among the biggest cryptocurrency exchanges US, delisted XRP in response to the Securities and Exchange Commission’s lawsuit against RippleLabs, the company behind XRP. However, the SEC vs LBRY lawsuit has given new evidence that XRP not a security is being sold by secondary holders.
The SEC vs LBRY lawsuit was about whether LBRY’s LBRY Credits were securities. However, the court ruled otherwise. The court’s decision was based upon the “investment contracts” test. This tests whether a token can be considered a security according to the buyer’s reasonable expectations. LBC failed to meet the requirements of an investment contract and was therefore not considered a security.
This ruling has major implications for XRP. It supports the argument that XRP purchased by secondary holders does not constitute a security. The XRP token does not qualify as a security and is therefore not an investment contract. This makes Ripple Labs’ lawsuit and Coinbase’s delisting of XRP questionable.
It is worth noting, however, that other countries like Japan and the United Kingdom have a different view of XRP, and treat it as a currency, rather than a security. This support the argument that XRP shouldn’t be subject to securities regulations.
These developments suggest that Coinbase should reevaluate its decision not to delist XRP. All evidence suggests that XRP does not constitute a security and Coinbase should reconsider delisting it in order to give its users access to a wider variety of assets. Coinbase would be demonstrating its commitment to providing a transparent and fair marketplace for cryptocurrency investors and traders by doing this.
The SEC vs LBRY decision has added evidence that XRP purchased by secondary holders is not a security. This ruling confirms that XRP should not be subject to the same regulations for securities. Coinbase should reexamine its decision not to delist XRP. To provide users with a wider range, it might consider relisting it.