- Bitwise’s XRP ETF has faced turbulence as the SEC scrutinize Ripple.
- Ripple’s gains have faltered with the SEC’s push to reclassify XRP.
- Bitwise’s ETF has faced possible delays, echoing Grayscale’s Bitcoin ETF saga.
Bitwise Asset Management’s recent filing for an XRP Exchange-Traded Fund (ETF) could be on shaky ground, as the U.S. Securities and Exchange Commission (SEC) pushes forward with its appeal to reclassify XRP as a security.
Bitwise’s move to register the fund with the SEC has sparked fresh debate within the crypto community, with many wondering if the regulatory roadblocks ahead may ultimately derail this high-stakes endeavor. The timing of Bitwise’s ETF filing comes as the SEC reignites its legal battle against Ripple Labs, the company behind XRP.
Ripple’s New SEC Challenge—Bitwise’s XRP ETF at Risk
Last year, Judge Analisa Torres ruled that XRP was not a security in its sales to retail investors—a partial win for Ripple in the drawn-out dispute. Yet, the court also handed the SEC a victory by ruling that Ripple had violated securities laws by selling XRP to institutional investors without proper registration.
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As a result, Ripple was slapped with a $125 million penalty. For a while, it appeared both parties might accept the mixed ruling. However, with the window for appeal nearing a close, the SEC has filed a notice on October 2 to contest the classification of XRP.
Should the Commission win its appeal, Bitwise’s XRP ETF may face significant obstacles, as a ruling that XRP is indeed a security would make it difficult to gain regulatory approval for the product.
Ripple’s CLO Calls Out SEC’s Losing Track Record
Despite recent developments, however, Ripple’s Chief Legal Officer, Stuart Alderoty, isn’t too concerned. He recently took to social media to highlight previous cases where courts have pushed back on the SEC’s arguments.
According to Alderoty, past decisions indicate that the appeals court might once again be skeptical of the SEC’s position. He cited the regulator’s prior battle with Aron Govil, in which the court responded to the regulator’s arguments with statements like “We do not agree with the regulators” and “The SEC’s counterarguments are unavailing.”
Crypto attorney Fred Rispoli is also weighing in, speculating that Bitwise’s ETF might meet the same fate as Grayscale’s Bitcoin ETF, which faced numerous delays before finally securing approval. Rispoli suggests that, while the SEC may prolong the process, it could ultimately end in approval for Bitwise—though the timeline remains uncertain.
On the Flipside
- If the SEC’s appeal succeeds, it could set a precedent that extends beyond XRP.
- Despite Ripple’s past legal wins, other cases show the judiciary can favor the regulator, meaning a positive outcome for Ripple isn’t guaranteed.
- Even if the ETF receives approval, the ongoing legal battles and regulatory scrutiny may impact the long-term viability and stability of an XRP ETF.
Why This Matters
This ongoing legal tussle is another twist in the evolving story of regulatory oversight. Whether the SEC’s latest move will ultimately block Bitwise’s ambitions remains to be seen, but one thing is clear: this high-stakes showdown could set the tone for the future of cryptocurrency ETFs in the United States.
To learn more about the recent XRP whale movements and the SEC appeal against Ripple, read here:
XRP Whales Move 153M Coins Amid SEC Appeal Against Ripple
To learn more about the ongoing legal battle between Ripple and SEC and what the hold up is on the SEC’s Form C filing, read here:
Ripple Awaits SEC’s Form C Appeal Filing: What’s the Hold-Up?
