The company Ripple controls the world’s third-largest cryptocurrency, XRP. Many banks have signed onto its network and bought equity stakes in its business, which wants to bring a change in how money moves around the world and yet when it comes to obtaining a coveted listing for XRP on two of the top United States cryptocurrency exchanges, the company has not been able to close the deal.
It is not for the lack of trying. A year ago, the San Francisco-based company suggested paying financial incentives to the venues, Gemini and Coinbase, according to 4 people with direct knowledge of the matter, who asked not to be revealed discussing private information.
For all the hype surrounding the Ripple and XRP, its absence on markets like Gemini and Coinbase is eye-catching. By dangling money in front of exchanges, Ripple gave an indication that its future success hinges in part on getting XRP listed on the top trading venues.
But there is a major headwind in that effort: United States officials have warned unlicensed exchanges not to list tokens that could be deemed securities. XRP’s control by a single company has fueled speculation it could fall under that designation.
Ripple’s efforts on Cryptocurrency
A year back, a Ripple executive asked whether a one million dollar cash payment could tempt Gemini to list XRP in the 3rd quarter, according to the people familiar with this matter. Ripple made many attempts to get Gemini to add XRP, exploring strategies like paying out rebates and covering related costs.
During initial talks with Coinbase, Ripple said that it would be interested in lending the exchange more than hundred million dollar worth of XRP to start letting users trade the asset. Ripple told Coinbase that it could pay back the loan in XRP or dollars, however, it did not give the proposal in writing.
If the exchange had chosen the latter, it could have been profited had the tokens become more valuable upon being listed. But Gemini and Coinbase both declined to go on with the proposals.
In the description of Ripple’s proposals to the exchanges, Ripple’s spokeswoman Emmalee Kremer said that regardless of greater transparency of Ripple with focus on building a strong ecosystem, the company wants XRP to be the most liquid digital asset.
The co-founders of Gemini, Cameron and Tyler Winklevoss, declined to make a comment.
It is not necessarily uncommon to pay for a cryptocurrency listing. The costs usually range from one million dollars “for a reasonably regarded token, to 3 million dollars for an opportunity to get high liquidity,” according to a report from Autonomous Research, which added that the figures are based on conversations among market participants and are not absolutely exact.
Few things have driven the price of XRP high in the recent months that is actually more than the speculation that the token is set to graduate to a United States exchange, which faces stricter regulatory purview than markets based in some other parts of the world.
A United States listing would also cement the standing of XRPs among titans of cryptocurrency such as Bitcoin which is the most popular and valuable of the bunch in the recent time.
Its advocates consider XRP as a valuable link between the world of banking and digital currencies that come with the backing of a Silicon Valley technology company.
XRP is designed to transform and reshape how banks move cash across borders, making transactions quicker and cheaper. Ripple uses incentives to lure the market makers to buy and sell XRPs and periodically sell its digital token to institutional investors.
While the coin does not represent an ownership stake in the company Ripple, the concern is the close relationship might still lead regulators to consider XRP a security.
If XRP is classified as a security, it would be removed from the largely unregulated Wild West of cryptocurrencies and it will be subject to requirements similar to those that govern assets like stocks and so would exchanges that offer XRPs. Still, investors are not giving up.
Based on the success of Ripple in gaining new customers as well as speculation it would be listed in the United States, XRP shot up more than fourteen times in value between early December and January, as per the data collected by CoinDesk.
Paying for a listing could be absolutely legal, given that the traditional markets charge such fees, said Jesse Overall. But things could get complex and intricate if a digital token were considered to be an unregistered security. In such a case, both the exchange and the issuer could face some penalties.
Jesse Overall says “Listing on an exchange is an integral part of the process of facilitating an unregistered, unlawful, illegal securities issuance to people who are not allowed to buy.”
Companies are mandated to pay for listings on the largest United States stock exchanges, but they also must meet and maintain some listing requirements.
For example, Nasdaq Inc.’s stock markets can charge annual listing fees ranging from $ 42,000 to $ 155,000, according to the rulebook of the company.
Gemini and Coinbase limit the cryptocurrencies that are traded on their platforms. Gemini’s customers can only trade Bitcoin and Ether, but a month ago, the Winklevoss brothers said that they want to expand to others such as Bitcoin Cash and Litecoin.
Coinbase has Bitcoin, Bitcoin Cash, Ether, and Litecoin; it reiterated on 5th March that it has not decided whether it will add new coins.
The United States SEC has said that the platforms serving as trading venues for digital assets considered to be securities will be required to register with the agency as a national exchange or qualify for an exemption.
The warnings of SEC have resonated in the industry. In March, the Winklevoss brothers submitted a proposal for a regulatory body to govern digital-currency markets and custodians.
Dave Weisberger, CEO of CoinRoutes which is a cryptocurrency data and order routing company, said that there is a reason why listing fees are not as common in crypto as they are on traditional securities platforms.
He also said that the equity space, listing fees have always been coupled with the notion of regulation while digital currencies are relatively unsupervised.
He claimed that the motive to list is still there as a crypto issuer paying to get their token on an exchange could make a hundred times that payment by selling off those coins when it lists.