Crypto asset manager Bitwise has officially filed a registration statement with the U.S. Securities and Exchange Commission (SEC) to launch the first-ever spot XRP Exchange-Traded Fund (ETF). This development follows the approval of Bitcoin and Ethereum ETFs earlier this year. However, the SEC's decision on Bitwise's XRP ETF remains uncertain, especially after recent legal disputes involving Ripple and XRP.

A Closer Look at Bitwise’s XRP ETF Filing

On September 30, Bitwise submitted its application to the SEC, aiming to establish a trust that would hold XRP in the same way its Bitcoin and Ethereum ETFs do. According to the recent filing, the ETF’s net asset value would be determined by the CME CF Ripple-Dollar Reference Rate, which aggregates trade data from major XRP trading platforms to provide accurate pricing. The ETF would allow investors to gain exposure to XRP without directly holding the asset, offering a simplified entry point into the cryptocurrency market.

Legal Background: The Ripple Ruling

The fate of Bitwise’s XRP ETF largely hinges on the SEC’s response to a recent ruling regarding Ripple, the company behind XRP. In July 2023, a U.S. court ruled that XRP sales on secondary markets to retail investors are not classified as securities. However, SEC Chair Gary Gensler has supported only Bitcoin and Ethereum ETFs previously due to regulatory concerns surrounding other cryptocurrencies. The SEC has until October 7, 2024, to decide whether to appeal the decision. If the SEC chooses to challenge the ruling, Bitwise’s chances of obtaining approval for its XRP ETF would drop drastically.

Bitwise Moves Forward Despite Legal Uncertainty

Despite potential roadblocks, Bitwise has pressed ahead with its ETF filing. The firm’s decision to file in Delaware, known for its favorable regulatory environment, is strategic. However, the SEC’s history with cryptocurrency ETFs suggests the process will not be quick. Even for Bitcoin and Ethereum, it took months for approval. While Bitwise’s XRP filing signals growing interest in crypto ETFs, the SEC’s stance on non-Bitcoin and Ethereum crypto assets remains cautious. Moreover, some analysts believe that external political factors could influence the SEC’s decision.

While Bitwise's initiative indicates significant interest in cryptocurrency ETFs, opinions on the success of the application are divided. The legal and regulatory situation surrounding XRP, along with political factors, continues to influence the state of cryptocurrencies on the stock markets.