XRP holdings on the popular cryptocurrency platform Coinbase have witnessed a dramatic decline, plunging by $2.8 billion over just three months. This steep drop raises questions about changing user behavior, regulatory pressures, and market dynamics affecting one of the top digital assets by market cap.

Coinbase’s Report Reveals Sharp Decrease in XRP Balances

Data from Coinbase’s latest transparency report sheds light on the scale of the XRP reduction. At the end of Q1 2023, the exchange held a notable $3.3 billion worth of XRP in its reserves. However, by the close of Q2, this figure had dropped substantially to just $515 million.

This withdrawal marks a striking 84% loss in XRP holdings on the platform, totaling a staggering $2.8 billion. For context, this isn’t a devaluation from price fluctuations alone, but reflects a significant net outflow of XRP from Coinbase accounts.

User Withdrawals and Decreased Trading May Be Key Factors

While Coinbase hasn’t publicly commented on the specific reasons behind the sharp exit, several market forces could be contributing. A prominent factor may be the SEC lawsuit against Ripple, which has created long-standing uncertainty for XRP trading in the U.S. Coinbase had suspended XRP trading shortly after the legal action began, which may have discouraged holders from keeping their XRP on the platform.

Additionally, the crypto community has seen surges in decentralized trading activity, with users opting to self-custody their assets. This broader shift toward non-custodial wallets and DeFi platforms could explain why XRP balances faded so rapidly within Coinbase.

XRP Ranks High Despite the Decline

Interestingly, even after this major reduction, XRP remains the fourth-largest digital asset on Coinbase in terms of value held. As of the end of Q2, only Bitcoin ($23.9B), Ethereum ($23.1B), and USD Coin ($2.2B) surpassed XRP in terms of holdings, indicating that despite its recent dip, it continues to hold weight among investors.

This staying power aligns with XRP’s broader usage in cross-border payments and interest from institutional players, especially outside the U.S., where regulatory ambiguity is less harsh.

Caption: Crypto investors continue to withdraw assets from centralized exchanges like Coinbase in search of safer or more flexible custody options.

Regulatory Pressures Continue to Shape XRP’s Path

The future of XRP on U.S. exchanges like Coinbase remains tightly intertwined with regulatory developments. The outcome of the SEC’s case against Ripple could determine whether exchanges re-list XRP for active trading and whether institutional confidence returns.

Notably, Coinbase itself is also facing legal scrutiny from the SEC, further complicating its decision-making around digital assets with questionable regulatory status. Until this climate stabilizes, massive asset retractions—like this recent $2.8 billion XRP withdrawal—may become a recurring trend.

Related: XRP Price: $12M Max Pain for Bears

As of now, XRP is traded more actively on global exchanges and used in utility-focused ecosystems, especially in overseas remittance and payment cases, offering a path of resilience even as U.S. markets adjust.