Election and SEC Appeal to Decide XRP ETF’s Future
Bitwise’s XRP ETF faces uncertainty as the SEC appeal and upcoming US election could determine its approval and the future of crypto ETFs.
After Bitwise filed for an XRP ETF this week, some industry experts believe the upcoming US election will be key in deciding its fate. With the growing popularity of spot crypto ETFs, political changes could influence their approval timeline.
The SEC’s recent appeal against Ripple Labs’ ruling adds more uncertainty, potentially delaying the approval of ETFs holding XRP. Bitwise’s filing, along with another from Canary Capital, indicates increasing interest in direct crypto asset funds, but regulatory clarity remains an issue.
Bitwise stated in a press release that XRP, which ranks seventh among digital assets with a market cap of $33 billion, supports cross-border payments. Neena Mishra from Zacks Investment Research believes Bitwise is preparing for a favorable regulatory environment if Donald Trump wins the 2024 election. If Trump wins, SEC Chair Gary Gensler, who has been tough on crypto, could be replaced.
On the other hand, if Vice President Harris wins, and Gensler stays, the ETF may face delays or rejections. Mishra's comments mirror sentiments from VanEck’s Matthew Sigel, who saw a Trump presidency as more favorable for crypto funds.
The SEC’s appeal complicates Bitwise’s efforts. The agency is challenging Judge Analisa Torres’s ruling, which partially sided with Ripple. While Ripple was fined $125 million for institutional sales, programmatic sales were deemed not to be securities. This ongoing legal battle is expected to slow down any regulatory decision on XRP.
The SEC has 240 days to approve or deny Bitwise’s ETF application once published in the Federal Register. Meanwhile, analysts expect XRP’s regulatory status to remain in flux, further impacting ETFs holding the token.
Galaxy Digital’s Alex Thorn noted that the chances of the ETF succeeding would drop to “near zero” if the appeal goes through. Bitwise’s XRP ETF is one of the latest in a wave of direct crypto funds, following spot bitcoin and ether ETFs, which launched earlier this year. VanEck and 21Shares are also pushing for spot solana ETFs, though no futures market exists for XRP or solana.
Some believe the SEC’s stance on other spot crypto ETFs outside BTC and ETH remains strict until a regulated futures market is established. However, Bitwise and Canary’s recent moves suggest that sentiment could be changing, with the Ethereum ETF’s approval signaling a shift.
While Bitwise has yet to comment, a Canary Capital spokesperson sees “encouraging signs” from the SEC. This year’s approval of spot Ethereum ETFs followed the earlier green light for spot bitcoin funds, reflecting a positive trend despite previous delays.
The outcome of Bitwise’s XRP ETF could mark a significant turning point for US crypto funds, depending on the results of the upcoming election and how the SEC’s appeal unfolds.
