Coinbase, the largest U.S. cryptocurrency exchange, announced it will halt trading of the XRP digital currency, after the Securities and Exchange Commission last week deemed it a security.
The SEC claims that cryptocurrency exchange Ripple Labs raised $1.3 billion through its sale of XRP without registering it or seeking an exemption for seven years.
If XRP is a security, traders must pay capital-gains taxes if they sell it at a profit.
“[In] light of the SEC’s lawsuit against Ripple Labs, we have made the decision to suspend the XRP trading pairs on our platform,” the exchange said in a blog post.
“Trading will move into limit only starting Dec. 28 and will be fully suspended on, Jan. 19 at 10 a.m. PST.”
But that timing can’t be guaranteed, Coinbase said.
“The trading suspension will not affect customers’ access to XRP wallets, which will remain available for deposit and withdraw functionality after the trading suspension,” Coinbase said.
“Customers will remain eligible for the previously announced Spark airdrop (subject to approval in certain jurisdictions), and we will continue to support XRP on Coinbase Custody and Coinbase Wallet.”
A strong argument can be made for the SEC’s move to label cryptocurrencies as securities rather than currencies.
The most fundamental use for a currency is as a medium of exchange in legitimate commercial transactions. And even bitcoin, the largest of the digital currencies, is barely used in that way.
At this point, digital currencies are basically vehicles for speculation. That makes them much closer to securities than currencies.