On Monday (February 25th), a few minutes after Coinbase announced that it had decided to launch XRP trading on Coinbase Pro, the CEO of Binance, its biggest competitor, took some credit for Coinbase's decision to finally welcome XRP, the world's third most valuable cryptocurrency by market cap.
But before we take a look at the comments Binance Co-Founder and CEO Changpeng Zhao ("CZ" for short) made about Coinbase and XRP, it is worth examining Coinbase's decision to list XRP on Coinbase Pro. Why has it taken Coinbase so long to list XRP and why has it decided to do so now?
Until yesterday, it was widely believed that the main reason for Coinbase's refusal to list XRP was that the U.S. Securities and Exchange Commission (SEC) might be considering XRP to be a security. But that line of thought held much less weight once Coinbase started offering ERC-20 tokens on its platform, most of which had raised funds via initial coin offering (ICOs), the vast majority of which SEC Chairman Jay Clayton considers to be securities.
Another potential reason for Coinbase's reluctance to list XRP until now is perhaps that it feared that its reputation as a high quality crypto exchange might suffer amongst its existing and potential future retail customers since so many of the people in the crypto community who do not hold XRP have such a negative view of Ripple the company and XRP the cryptocurrency, possibility in part due to some of the heavy criticism of XRP posted on social media platforms by Bitcoin maximalists and fans of other altcoins.
As for why Coinbase had finally decided to list XRP, here are a few possible explanations:
- As the second or third most valuable cryptocurrency by market cap, XRP was just too big to ignore, especially considering that a much less significant cryptocurrency, Ethereum Classic (ETC), was already listed there.
- Since Coinbase had gotten away with listing various ERC-20 tokens, i.e. not suffered any complaints from the SEC, it is likely that the Coinbase legal team felt quite safe with the decision to list XRP.
- Since Barry Silbert's crypto-focused incubator and venture capital firm Digital Currency Group (DCG) is an investor in both Coinbase and Ripple, it is possible that some of the pressure to list XRP came from DCG.
- The harsh crypto winter that we have been experiencing since around mid 2018 has led to trading volumes on all spot exchanges (such as Coinbase and Binance) heavily decreasing, thereby affecting profits that come from trading fees. So, Coinbase needed to do something to boost its user base and potentially increase revenue from fees generated from these users. One way to increase profits was to make moves towards embracing institutional investors, which it has done with initiatives such as Coinbase Custody. Another was to increase the number of cryptoassets it offers and the jurisdictions in which these are offered. And so, it made sense to finally list XRP and welcome all those members of the XRP community that had been forced to trade XRP elsewhere.
CZ, the CEO of Binance, however, feels that there is one more possible explanation: that once Binance had decided to make XRP a base currency, it had raised the pressure on Coinbase so much that if Coinbase wanted to compete with Binance for the attention of the huge community of XRP holders, the very least it could do was to list XRP on Coinbase Pro. Here is CZ's tweet on this subject:
Like to think we contributed to the adoption, maybe just a tiny bit, lol. Congratulations #XRP!— CZ Binance (@cz_binance) February 25, 2019
The more adoption, the better, and the faster thing move around the world. It's spreading. https://t.co/5IIvm5QFuq
CZ definitely does certainly deserve the gratitude of the XRP community for his support of XRP, and we will probably never find out for sure the biggest factor in Coinbase's decision to list XRP, but it is quite likely that this decision was influenced by more than one factor and Binance's support for XRP is very likely to be one of them.