Still No XRP in Coinbase International, Attorney Reacts

The recently-launched international exchange from Coinbase has sparked reactions to its exclusion of other assets, such as XRP.

Coinbase, America’s largest crypto exchange, recently unveiled its global platform, “Coinbase International Exchange,” to cater to institutional investors outside the United States. Despite operating outside the jurisdiction of the US, the exchange only includes Bitcoin (BTC) and Ether (ETH) at launch, triggering reactions from pro-XRP attorneys.

Coinbase announced the launch on May 2, noting that it would initially include ETH and BTC perpetual futures markets settled in USDC, allowing up to 5x leverage. In response, pro-XRP lawyer Bill Morgan sarcastically called attention to the fact that the exchange only supports BTC and ETH.

“Such a big percentage of Coinbase’s holdings and trading on its exchange,” Morgan remarked. While this is factual, as BTC and ETH account for a huge chunk of the trade volume on Coinbase, it emphasizes the sole support of these two assets – a trend observed among some American firms, such as Fidelity Investments, as they seek to avoid regulatory compliance issues in the US.

BTC and Ethereum of course. Such a big percentage of Coinbase’s holdings and trading on its exchange. https://t.co/YgymHlJaHc

— bill morgan (@Belisarius2020) May 2, 2023

Attorney Deaton on Coinbase Int

Following the announcement, attorney John Deaton, an amicus curiae in the Ripple vs. SEC case, expressed his dissatisfaction with the crypto regulatory landscape in the US. The climate has triggered a mass exodus of firms and limited crypto offerings to BTC and ETH.

SHAME ON U.S. REGULATORS

Consider the following:

In 2017 SEC issued the DAO. Then 2017-19 there were 57 enforcement actions 🆚 crypto companies, involving ICOs (#KIK, #Telegram, etc).

In 2018 we got the Hinman Speech.

In 2019 the SEC issued its Framework for Digital assets. https://t.co/u9Ucy3W8Iv

— John E Deaton (@JohnEDeaton1) May 2, 2023

Deaton highlighted the slew of enforcement actions, up to 52, against firms such as Telegram and Kik between 2017 and 2019. The lawyer also called attention to the fact that Jay Clayton, former SEC chairperson, and William Hinman, a former SEC director, agreed that while a token could be issued as a security at first, that does not automatically make the asset a security.

This argument aligns with Deaton’s position, as the lawyer has repeatedly stressed that XRP could have been sold as a security earlier on, but it does not make the asset a security. Deaton also cited the SEC’s digital asset framework released in 2019, which stated that if an asset is used as a medium of payment or a substitute for fiat, it is “unlikely to satisfy the Howey test.”

Deaton argues that, as a payment medium, XRP should not be considered a security in itself. He also cited the Financial Stability Oversight Council (FSOC) annual report for 2019, which called XRP a virtual currency, not a security. Conclusively, Deaton claims most altcoins could have been issued as securities during their ICOs, but it doesn’t make them securities inherently.

He further alleged that the SEC is not aiming to protect investors. ‘[…] one thing you CANNOT credibly argue is that the SEC is even remotely protecting investors. Not only has it failed miserably to protect investors, it hasn’t maintained “fair, orderly, and efficient markets” nor “facilitated capital formation,”‘ Deaton concluded.