Coinbase Designates XRP (XRP) and Shiba Inu (SHIB) as Currencies

Coinbase has officially designated XRP (XRP) and Shiba Inu (SHIB) as currencies, underscoring their potential to function as forms of money or stores of value.

Coinbase has officially designated XRP (XRP) and Shiba Inu (SHIB) as currencies, underscoring their potential to function as forms of money or stores of value. This classification is a part of the exchange’s effort to categorize certain assets depending on their uses, and this places XRP and SHIB with BTC and LTC.

The move by Coinbase shows that XRP and SHIB, besides seven other cryptocurrencies, were intended to be used as means of transactions. Other assets that fall under this “currencies” classification include Bitcoin (BTC), Dogecoin (DOGE), Bitcoin Cash (BCH), Litecoin (LTC), Stellar Lumens (XLM), Zcash (ZEC), and Dash (DASH).

This classification is useful for both XRP and SHIB as it helps to establish the assets as legitimate digital assets for use in transactions and as a store of value despite the nature of the crypto market being rather volatile. According to Coinbase, these tokens possess fundamental characteristics of money: they can serve as a measure of value, a means of storing value, and a means of payment.

The classification of XRP as a currency is timely, given the current discussion on the legal status of the token. Ripple (XRP) has been the focus of a legal dispute between the U. S. Securities and Exchange Commission (SEC) and Ripple Labs, the company behind the cryptocurrency. In 2020, the SEC filed a lawsuit against Ripple, stating that XRP was a security.

A recent decision made by a federal judge established that XRP is not a security but can be sold as part of an investment contract in specific scenarios. This decision brought some light to the situation but still did not clarify the possible states of XRP. However, the positioning of Coinbase to categorize XRP as a currency aligns with the earlier stand taken by the U. S. Financial Crimes Enforcement Network (FinCEN), which categorized XRP as a virtual currency as early as 2015.

Although the SEC has not labeled SHIB as a security, its past legal actions against Ripple have caused uncertainty in the broader market. The SEC’s acknowledgment in its lawsuit against Binance that crypto assets are “merely computer codes” and not inherently securities further complicates the regulatory landscape.

The case between the SEC and Coinbase has continued to unfold and has recently undergone major development. At the time of filing this case on September 18, 2024, the SEC has asked for more time for fact discovery in the case and the current deadline is set for October 18, 2024 but the SEC has sought an extension till February 18, 2025. This is in the light of the SEC having to go through over 133,000 documents that are unique to the case.

Coinbase, Inc. and Coinbase Global, Inc. have consented to this extension, which shows how deep and extensive the investigation is. The case was filed in June 2023 and alleges that Coinbase is in violation of federal securities laws for offering and trading digital assets on its exchange without being registered as a national securities exchange, broker, and clearing agency.

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