- Bitwiseโs XRP ETF has faced turbulence as the SEC scrutinize Ripple.
- Rippleโs gains have faltered with the SECโs push to reclassify XRP.
- Bitwiseโs ETF has faced possible delays, echoing Grayscaleโs Bitcoin ETF saga.
Bitwise Asset Managementโs 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.
Bitwiseโs 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 Bitwiseโs ETF filing comes as the SEC reignites its legal battle against Ripple Labs, the company behind XRP.
Rippleโs New SEC ChallengeโBitwiseโs XRP ETF at Risk
Last year, Judge Analisa Torres ruled that XRP was not a security in its sales to retail investorsโa 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, Bitwiseโs 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.
Rippleโs CLO Calls Out SECโs Losing Track Record
Despite recent developments, however, Rippleโs Chief Legal Officer, Stuart Alderoty, isnโt too concerned. He recently took to social media to highlight previous cases where courts have pushed back on the SECโs arguments.
According to Alderoty, past decisions indicate that the appeals court might once again be skeptical of the SECโs position. He cited the regulatorโs prior battle with Aron Govil, in which the court responded to the regulatorโs arguments with statements like โWe do not agree with the regulatorsโ and โThe SECโs counterarguments are unavailing.โ
Crypto attorney Fred Rispoli is also weighing in, speculating that Bitwiseโs ETF might meet the same fate as Grayscaleโs 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 Bitwiseโthough the timeline remains uncertain.
On the Flipside
- If the SECโs appeal succeeds, it could set a precedent that extends beyond XRP.
- Despite Rippleโs 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 SECโs latest move will ultimately block Bitwiseโs 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 SECโs Form C filing, read here:
Ripple Awaits SECโs Form C Appeal Filing: Whatโs the Hold-Up?
