Watch out for XRP Liquidity as Crypto Exchanges Begin Delisting

Many people in the cryptocurrency industry predicted an incoming gloom for XRP, after the blockchain company Ripple, revealed on Tuesday that the US Securities and Exchange Commission (SEC) was preparing to charge them. The lawsuit was filed later that day, which saw the cryptocurrency shading massive price points. 

Aside from this, many cryptocurrency exchanges have already begun delisting XRP on their platform – which is not a healthy development for the cryptocurrency.

SEC Says XRP is a “Security”

As Crypto News Australia recently reported, the ongoing case with Ripple stems from the long-standing controversy about XRP being security. According to the SEC, Bitcoin (BTC) and Ether (ETH) are not securities because they are decentralized and not controlled or issued by any company. XRP took the opposite side of this when Ripple issued billions of it in the past eight years. 

So, the US regulator accused the company and its executives of issuing unregistered securities to investors. Since the lawsuit was filed, the cryptocurrency has been taking massive hits.

At the time of writing, XRP trades at $0.33 on Coinmarketcap, which accounts for a -30 percent price change in a 24 hours count. Consequently, the cryptocurrency has also lost the position as the third-largest digital currency by market capitalization to Tether (USDT), the US dollar-backed stablecoin. 

XRP Might Face Liquidity Issues

Presently, about three cryptocurrency exchanges – Beaxy, CrossTower, and OSL – have discontinued support for the Ripple cryptocurrency, amid the development. This could be seen as an effort to run away from legal issues with the SEC, as exchanges that continued to support the crypto would likely be ordered to register with the SEC as a security exchange or face a fine – that’s if the SEC wins the case.

Notionally, more exchanges might delist XRP for the same reason, as the whole case unfolds. When this happens, XRP will fall into a liquidity crisis which isn’t a healthy sign for the crypto’s performance. “Many cryptocurrency exchanges would be forced to delist it, so liquidity would dry up,” said Ryan Watkins, a research analyst at Messari.