Kraken has become the latest cryptocurrency exchange to suspend XRP token trading in light of the US Securities and Exchange Commission's enforcement action against Ripple and two of its executives.
However, this decision is only limited to operations carried out by US clients, which will take effect on January 29, 2021. Non-US clients are not affected and can trade all cryptocurrencies as normal, as well as with derived from said assets.
Kraken said the trading suspension will not affect clients' access to deposit, hold and withdraw XRP, which will remain available even after trading stops, the firm emphasized in its latest update.
Kraken isn't the only high-profile exchange suspending XRP, as other exchanges such as Coinbase, Bitstamp, and OKCoin have made similar decisions following legal action from the SEC.
The price of XRP has plunged another five percent today as more exchanges and partners are distancing themselves from the fourth-largest crypto asset by market capitalization.
As previously reported, the SEC's lawsuit was filed against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen, claiming they raised $ 1.3 billion through ongoing and unrecorded security offerings since 2013.
Although Ripple said it will contest the charges, the legal battle with the SEC could take years if the company disputes the charges in court. As such, those who keep the token listed on their platforms may risk being sued and fined if the SEC wins their case and the court considers unregistered XRP securities.
While the SEC's lawsuit is far from resolved, Kraken was careful not to partner with illegal assets, as the exchange has approval from a state regulator in the US to launch a cryptocurrency bank under a letter from SPDI. An SPDI banking charter allows Kraken to operate an independent bank that will reduce reliance on third-party financial institutions and enables the exchange to provide deposit-taking, custodial, and fiduciary services for digital assets.