U.S.-based crypto asset management firm Bitwise has filed for an XRP spot ETF with the Securities and Exchange Commission (SEC).
According to a report from Fox Business, Bitwise submitted a Form S-1 registration statement to the SEC on October 2, 2024. Earlier this year, after the SEC green-lighted Bitcoin and Ethereum ETFs, Bitwise also successfully launched BTC and ETH ETFs. While the filing with the SEC could be a first step toward launching an XRP ETF, it is unlikely that the financial regulator would grant approval.
The problem with an XRP ETF is that if it is allowed to trade on Wall Street, it would mean XRP is not a “security.” However, with no clarity on how the SEC classifies various crypto assets, as seen in several cases—including a long-standing one with Ripple—the approval of the XRP ETF looks challenging.
Back in August, the SEC rejected a filing seeking permission to launch a Solana ETF for similar reasons. The financial watchdog continues to regard almost all cryptocurrencies, apart from Bitcoin and Ethereum, as securities.
In talks with Fox Business, Bitwise CEO Hunter Horsley stated: “XRP is one of the most enduring, well-known assets in the space and is also recognized among mainstream investors. At Bitwise, we’ve always aimed to help investors access opportunities in the space, and we’re excited to continue that work with our filing for a Bitwise XRP ETP.”
How Does the SEC Decide What Is an Unregistered Security?
Unfortunately, despite multiple litigations, we have yet to learn from the financial regulator how it decides which crypto assets are unregistered securities and how it classifies them as such.
The financial watchdog has shut down many crypto brokers in the U.S., charging them with selling unregistered securities without informing them which crypto assets it classifies as “unregistered securities” and why.
In a recent example, eToro, a leading crypto broker, had to comply with the SEC and effectively end all its operations in the US after being charged with selling “unregistered securities.”
However, not all exchanges and brokers toe the line of the financial regulator; some, like Kraken, take on the challenge head-on. Contending against similar charges that were pressed against eToro, Kraken, a leading crypto exchange, decided to challenge the SEC and demanded a jury trial.
In its filing, Kraken categorically denied all charges, blaming the SEC for acting beyond its legal limits and demanding an explanation regarding how the financial regulator classifies crypto assets as “unregistered securities.”
Considering how the SEC has responded in previous cases seeking answers to this particular question, it seems highly unlikely that Bitwise stands a chance to move past the initial steps toward launching an XRP spot ETF.
