Kraken has become the latest cryptocurrency exchange to suspend trading on the XRP token in light of the US Securities & Exchange Commission’s enforcement action against Ripple and two of its executives.
However, this decision is only limited to trading made by US customers, which will be effective on January 29, 2021. Non-US customers are unaffected and can trade all cryptocurrencies as normal, as well as derivatives of such assets.
Kraken said the trading suspension will not affect customers’ access to deposit, hold, and withdraw XRP which will remain available even after trading is halted, the firm emphasized in their latest update.
Kraken is not the only high-profile exchange to suspend XRP, as other exchanges like Coinbase, Bitstamp and OKCoin have made similar decisions following the SEC’s legal action.
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XRP price has dropped another five percent today as more exchanges and partners are distancing themselves from the fourth-largest cryptoasset by market capitalization.
As Finance Magnets reported, the SEC’s lawsuit was filed against Ripple CEO, Brad Garlinghouse and Co-founder, Chris Larsen, alleging that they raised $1.3 billion via ongoing, unregistered securities offerings since 2013.
Although Ripple said it will contest the charges, the legal battle with the SEC could take years if the company fights the charges in court. As such, those who keep the token listed on their platforms may be at risk of being sued and fined if the SEC wins its case and the court deems XRP as unregistered securities.
While the SEC’s lawsuit is a long way from being ruled upon, Kraken was careful about not associating with illegal assets as the exchange holds approval from a state regulator in the US to launch a crypto bank under an SPDI charter. An SPDI bank charter permits Kraken to operate an independent bank that will reduce reliance on third-party financial institutions and allows the exchange to provide deposit-taking, custody and fiduciary services for digital assets.