What to do if you own Bitcoin Cash, XRP or Ethereum Classic on Coinbase
Coinbase, the largest US-based crypto exchange, has announced that it is delisting XRP, Bitcoin Cash and Ethereum Classic. The move comes in response to what Coinbase called “low usage” of the coins, which will be eliminated from the exchange starting in January 2023.
As the coins will be removed from the Coinbase wallet in just over a month, those who have the coins will have to decide what to do with their assets as that deadline approaches.
Why XRP, Bitcoin Cash and Ethereum Classic are being delisted
It’s not uncommon for coins to be removed from an exchange due to low usage or other concerns, and with the three coins involved, it’s not a completely surprising move.
XRP in particular has been marred by controversy. Most recently, it has been mired in an ongoing legal battle with the US Securities and Exchange Commission (SEC). The original cryptocurrency of digital payment network Ripple, the SEC lawsuit alleges that the company raised more than “$1.3 billion through an unregistered ongoing securities offering” from which the company’s founders personally profited.
Bitcoin Cash and Ethereum Classic, meanwhile, both recently experienced what is known as a “hard fork.” This means that a blockchain splits in two.
Hard forks usually occur when there is disagreement within the coin community about which direction the blockchain should take, said Josh Fraser, co-founder of Origin Protocol, a company that created OriginDollar, a yield-bearing stablecoin, and Origin Story, an NFT platform.
“One half of [coin’s] the community wants to take the blockchain in one direction, and the other half wants to go in another direction,” Fraser said. “When this happens, people who had the coin now have two, and the value is split.”
When there is a hard fork, one of the coins may be dominant, while the other may not have as much adoption or value, according to Commodity.com.
All of these factors likely played a role in Coinbase’s decision this week, Fraser said.
“Coinbase supports a lot of digital assets. They have their own process where they choose what they want to list and what they don’t want to list. A whole lot goes into that decision-making process – demand, security, regulatory concerns,” said Fraser. “We also see that assets are delisted when there is not enough interest in them and they are not traded enough, so the exchange does not make money from them.”
What does delisting mean for your funds?
Importantly, the assets deleted by Coinbase will not be lost as a result of the exchange’s decision. A statement issued by the company explained that any unsupported assets left on the exchange after the January deadline will still be linked to each user’s address and accessible through the owner’s Coinbase Wallet recovery phrase.
“To view or transfer these assets after January 2023, you will need to import your recovery phrase to another wallet provider that does not support these networks,” Coinbase explained.
This means the coin funds are completely safe even after January, said Reeve Collins, co-founder of Tether, the first and largest stablecoin, and co-founder of SmartMedia Technologies, a Web3 and blockchain solutions company.
“Just because they’re not listed doesn’t mean they’re at risk,” Collins explained. “They will be held on Coinbase until you decide to move them out of Coinbase.”
But just because the delisted assets are safe doesn’t mean keeping them listed is the best move, Collins added. “It would be like leaving money in a vault somewhere,” he said. “You have to move them out of Coinbase at some point or you can’t trade them or sell them.”
The good news is that all three coins are still very popular in the cryptocurrency world, and there are many other options for long-term storage and use.
Alternatives for your delisted coins
Those who hold XRP, Bitcoin Cash or Ethereum Classic assets can choose to manage the coins themselves, move them to another exchange or even sell them.
Self storage
Spend any length of time talking to cryptocurrency experts and you’ll likely hear the phrase “Not your keys, not your coins.” It’s a common mantra that refers to what is often seen as a best practice in the crypto world – which is self-storage of coins. When you store coins on an exchange, you relinquish control over them and take the exchange’s promise that the coins will be there. As the recent collapse of the FTX exchange illustrates, these promises are not always kept.
In the current case of Coinbase removing the coins, both Collins and Fraser suggested that the best first step is to simply remove your holdings from the exchange and store them in your own wallet.
“The Ledger hardware wallet supports all three of these coins. So if you get a Ledger, you’re good to go,” Fraser said.
Register with another exchange
Those immersed in all things crypto already know this, but there are many other cryptocurrency exchanges besides Coinbase. Once XRP, Bitcoin Cash and Ethereum Classic are removed from Coinbase, owners of these assets can simply choose to move them to another exchange.
“You have hundreds of different exchanges. There are different exchanges that are popular in different parts of the world, Fraser said. “Coinbase is more popular in the US, but globally Binance is the biggest exchange.”
Those who chose to move their coins to another exchange simply need to check in advance whether the exchange supports XRP, Bitcoin Cash or Etherium Classic. But there are many exchanges that continue to support all three, Fraser and Collins said.
Sell your coins
While the timing of selling an asset, including selling cryptocurrency, is generally a personal decision, there is yet another option for those who hold these coins. But if you choose to sell, remember that it will trigger a tax event, Fraser said.
“There will be tax implications if you sell,” Fraser explained. “If you have a lot of Bitcoin Cash and you sell it now, you will take a tax on it. But if you transfer the coins to a wallet or another exchange, it will not be a tax event.”
The takeaway
The bottom line, according to both Fraser and Collins, is that all three of these coins still have value. Coinbase’s decision to remove the exchange does not affect this fact.
“The coins are still worth what the community deems them to be worth. Just because Coinbase doesn’t support them doesn’t mean these coins are going away,” Fraser says. “Tens of thousands of people around the world like these coins and support them. They’re all going to do well. Coinbase is a big exchange, but there are a lot of other exchanges.”
