Coinbase’s Filing for XRP Futures: A Recap
Coinbase, a leading cryptocurrency exchange, recently made headlines with its filing to self-certify XRP futures through its derivatives arm, Coinbase Derivatives. The move, announced on April 3, aims to provide investors with a regulated and capital-efficient way to gain exposure to XRP, which Coinbase referred to as “one of the world’s most liquid assets.”
Attorney John Deaton, in a recap of Coinbase’s engagement with XRP, highlighted the exchange’s analysis that XRP is not a security. According to Deaton, Coinbase’s team of experienced securities lawyers conducted an internal assessment of XRP using its digital asset framework and determined that the coin did not meet the criteria of a security. In January 2019, Coinbase shared its findings with the SEC to ensure alignment with the commission’s perspective on XRP before listing the asset on its platform.
Interestingly, the SEC did not dispute Coinbase’s analysis, as its own enforcement lawyers had previously conducted a similar assessment. Despite publishing an XRP Howey Analysis Memo in 2018, the commission never definitively classified XRP as a security. This validation from the SEC allowed Coinbase to list XRP on its platform in February 2019, highlighting its utility for free international money transfers alongside USDC.
However, the SEC’s subsequent lawsuit against Ripple and its executives in late 2020, alleging XRP to be a security, led to Coinbase and other U.S. exchanges delisting the token to avoid regulatory repercussions. In response, a group of over 75,000 XRP holders joined the legal battle as amici curiae, with 3,000 investors submitting affidavits asserting their lack of knowledge about Ripple at the time of their XRP purchases.
In a significant turn of events, Judge Analisa Torres ruled in July 2023, citing the affidavits and agreeing with Ripple and Coinbase that XRP itself was not a security. Following this decision, Coinbase and other exchanges relisted XRP, marking a positive development for the cryptocurrency.
Fast forward to the present day, Coinbase’s announcement of self-certifying XRP futures signals its continued support for the digital asset. Pending approval from the CFTC, XRP futures contracts are set to launch on Coinbase on April 21, 2025. This decision comes shortly after Ripple agreed to drop its cross-appeal, aligning with the SEC’s resolution to end the prolonged legal dispute.
In conclusion, Coinbase’s proactive engagement with XRP underscores its commitment to providing innovative investment opportunities while navigating the evolving regulatory landscape of the cryptocurrency market. Stay tuned for further updates on this exciting development in the world of digital assets.