XRP dropped more than 10% on Thursday after the U.S. Securities and Exchange Commission abruptly paused approval of a new crypto ETF just hours after initially greenlighting it.
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The decision, which affects a Bitwise fund that holds Bitcoin, Ethereum, and XRP, is the second such reversal in July, sparking uncertainty across the crypto market.
The fund, which includes Bitcoin, Ethereum, and XRP, was set to launch following approval at the staff level.
In a surprising turnaround, the SEC’s full Commission intervened just hours after staff approval by invoking Rule 431 — a seldom-used discretionary review process that instantly halts decisions without any public timeline or explanation.
This rule gives the SEC’s five commissioners the power to override lower-level staff decisions, putting the approval on hold for an internal review. Its use in ETF cases is extremely rare, adding to the uncertainty around the move.
Second ETF Freeze in a Month
This is the second high-profile ETF freeze this month. Earlier in July, Grayscale’s GDLC fund, which also holds XRP and other altcoins, suffered the same fate.
Grayscale has since warned the SEC that investors are being “harmed” by the delays, even suggesting legal action could follow.
Bitcoin and Ethereum Get a Pass, Altcoins Get the Brake
Industry insiders are baffled. The SEC continues to fast-track Bitcoin and Ethereum-only ETF rule changes, such as redemption processes for giants like Fidelity, Franklin Templeton, and Invesco, while stalling or blocking ETFs that include altcoins like XRP and Solana.
There’s growing speculation across the crypto community on X about whether this is a coordinated move, with users wondering who gains from the confusion.
Some suggest that powerful insiders could be contributing to the uncertainty while XRP gains traction with institutional investors.
The XRP price has dropped more than 10% since the announcement. XRP now trades at $3.10, down sharply from July’s highs, as markets react to the SEC’s unpredictability.
Why This Matters
The SEC’s inconsistent handling of crypto ETFs is creating uncertainty for both investors and issuers. While Bitcoin and Ethereum products continue to progress, funds, including alternative cryptocurrencies like XRP, face unexplained delays, raising concerns about fairness and regulatory transparency.
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The Bitwise 10 Crypto Index ETF is an exchange-traded fund designed to track the performance of the top 10 cryptocurrencies by market capitalization, including Bitcoin, Ethereum, XRP, and others.
The SEC’s full Commission invoked Rule 431 for discretionary review, pausing the approval without a public timeline or explanation.
The ETF holds a diversified basket of cryptocurrencies weighted by their market value, allowing investors to gain broad exposure to the crypto market through a single investment product.
The unexpected halt introduces market uncertainty, affecting investor confidence and potentially influencing the prices of the cryptocurrencies included in the ETF, like XRP.
The ETF is currently under discretionary review by the full SEC Commission, with no set timeline for when a final decision will be made.
