If Ripple really loses the SEC lawsuit, which trading platform will be most affected?

On December 29, the encrypted trading platform Coinbase announced that it plans to stop XRP transactions on January 20.

After nearly a week of fermentation, Coinbase delisted XRP and finally the dust settled. As an old-fashioned cryptocurrency project with the third largest market value in the world except Tether, Ripple has almost launched most of the trading platforms, which means that the delisting of XRP is not only detrimental to project parties or investors, but also to platforms that provide trading services. Also deeply affected.

And if XRP is really deemed non-compliant by regulators, which platform's trading volume will be impacted the most?

Who is Ripple's XRP sold to?

According to statistics, since 2016, Ripple has sold $1.29 billion worth of XRP, about 48% of which were sold directly to cryptocurrency exchanges ( and then sold to retail investors), while another 52% was sold directly to institutions via OTC.

The picture above shows Ripple selling XRP every year Statistics, image source: The Block

From the statistical data, Ripple sold the largest amount of XRP in the second quarter of 2019, and its performance in the market It is better to stop selling operations. In fact, Ripple has not sold tokens to exchanges since the fourth quarter of 2019, but it is also likely that the sales were only through institutions.

Image source: The Block

The transfer to the agency may be through the acquisition of the company. According to statistics, in June and November 2019, Ripple made a total equity investment of $50 million in MoneyGram in exchange for its stock and board seats. It is understood that Ripple currently holds about 9% of the latter's shares, but in November of this year, Ripple sold about one-third.

And according to MoneyGram's earnings report, Ripple has paid it $52.3 million worth of XRP since 2019, which the company categorizes as It is a "market development fee", not revenue.

Who "abandoned" XRP

Since the SEC lawsuit, as of December 29, several platforms targeting US users have And the company stops XRP transactions or related services. Trading platforms include Coinbase, Bitstamp, OSL, CrossTower, Beaxy, and OKCoin; market makers/OTC merchants include Jump trading, Galaxy Digital, and B2C2; asset managers include Bitwise and 21 Shares; and payment processor Simplex.

Among them, Bitwise, an encrypted asset management company, has closed its XRP position in its index fund. Before the liquidation, XRP accounted for 3.8% of the fund. European crypto asset manager 21Shares has also removed XRP from all of its ETP offerings, citing their ban on “any token that is a security, and any token that may have liquidity issues.” In December of this year, B2C2, the largest XRP market maker, was acquired by a subsidiary of the Japanese financial giant SBI, which also suspended the use of users in the United States.

Why haven't other trading platforms taken any action yet? An important reason is of course the impact or impact on the business.

For the trading platform, the encrypted assets of fans means potential trading volume, which means the subsequent transaction fees. According to data from CoinMarketCap, even with lawsuits and the delisting of multiple trading platforms, the current daily trading volume of XRP is nearly 10 billion US dollars.

This data is second only to Bitcoin, Ethereum and Tether, comparable to Litecoin, and far surpasses projects such as Bitcoin Cash and Polkadot.

According to The Block's analysis, the current transaction volume generated by XRP can account for 5-20% of the total transaction volume, and according to the differences of each trading platform, if the comprehensive Delisting will at least reduce the total revenue of the platform by 5%. Take Bitstamp, which focuses on the European market, as an example. In 2020, the transaction volume of XRP accounted for 18.5% of the total transaction volume of the platform.

Image source: The Block

This explains why Bitstamp also suspends US customers when faced with regulatory risk XRP, not All prohibited. In addition, XRP’s transaction volume accounted for a higher proportion of the Japanese platform Bitbank and the Mexican platform Bitso, 35.0% and 50.8%, respectively. As important partners of Ripple, the two platforms are currently on the sidelines.

It can also be seen from the above figure that the trading platforms we are familiar with such as FTX, OKEx, Liquid, Huobi, Bittrex, Binance, Bitfinex and Kraken are not The main battlefield of XRP trading, the trading volume accounts for 1-6% of its total trading volume.

If the usual practice is followed, Ripple's lawsuit may drag on for months or even years, and no one can be sure what kind of agreement the Ripple team will reach with the regulators , but no matter what the result is, the XRP market will be greatly affected. We can intuitively understand this from the fact that XRP fell from $0.6 to $0.22 on December 29 in the past 10 days.

Now that the compliant trading platform Coinbase has started, other players are likely to follow: asset managers may close positions, large market makers Liquidity is no longer provided, and encrypted trading platforms are likely to suspend XRP trading services to US users one after another. Ripple's situation may become more and more difficult.

Reference article: 《Looking at the effect of potential XRP delistings on exchanges》

Extended reading: "What the SEC Didn't Tell You about Ripple"

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