One year ago today, Coinbase announced that it was radically shifting the way it listed assets on its various crypto exchange products. Its first major change was moving putting the onus on communities and projects which wanted their assets listed by launching an application process.
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For those of you just tuning in, Coinbase is a premier US-based Bitcoin exchange with well over 10 million users.
The exchange prides itself as being one of the largest “retail on-ramps” at the same time as it operates a highly competitive “professional” exchange. Those products are respectively called Coinbase and Coinbase Pro.
Just a few months later, Coinbase and Circle would join efforts to launch one of a wave of competitors to Tether (USDT), the world’s first “stablecoin.” Called USDCoin, Coinbase’s joint effort has been more successful than her era-siblings, Paxos Standard and Gemini Dollar, who combined have had far less investment than USDC.
Coinbase’s next controversial move as regards assets was the addition of Ripple Labs’ XRP token. Headlines circulated about Coinbase violating its own user agreement in listing Ripple, being that it apparently violated some of company’s asset listing standards.
The Ripple Army Storms Coinbase Headquarters
Ripple supporters had for years felt offended by Coinbase’s lack of support for XRP.
I Am Not implying anything
GDAX, Coinbase Pro and Coinbase Prime will be offline.
Jun 3, 2018, 08:00 PDT: We will be performing scheduled maintenance on Sunday June 3 from 8:00 pm PST to 9:30 pm PST.
CoinBase Link https://t.co/1wXraFOlPu
— ???? ??? (@BankXRP) June 3, 2018
Chief among Ripple’s unfitness, in the eyes of detractors, was its supply model. Ripple is what’s known as a “pre-mined” cryptocurrency. Rather than generating new tokens through some economic process of controlled inflation or through purchases, as in the case of regular stablecoins.
Instead, when Ripple was founded, a large portion of its tokens were reserved for the company Ripple Labs.
To this day, Ripple, between its founding officers and its corporate entity, controls more than 60% of all XRP in existence. The company periodically sells a hunk of coins to fund operations, a situation which recently came under intense scrutiny from the XRP community.
Coinbase’s GDAX asset listing framework specifically forbids cryptocurrencies where the issuing company/founders have more than a “minority” stake. Through some mental gymnastics, it’s reasonable to argue that since Ripple is technically unable to access more than the allowed escrow amount of XRP every month, it “controls” a minority stake.
But Ripple critics were not satisfied with any amount of justification. From a telescopic viewpoint, the two events seem connected: Coinbase’s listing reinvigorates discussion around Ripple’s escrow system; months later, XRP believers demand in earnest that the company “dump” less XRP on the market.
In the end, Coinbase, like all crypto companies looking to stay out of government crosshairs, is going to do what it is allowed to do.
The discussion around whether or not XRP is a security will eventually play a hugely important role to companies like Coinbase, who must contend with the wide berth of XRP’s market capitalization and supportive community at the same time as it finesses regulatory bodies.