Will US SEC Appeal Block Bitwise XRP ETF Launch?

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As a seasoned crypto investor with a knack for navigating the intricate waters of regulatory decisions and market trends, I find myself treading cautiously regarding Bitwise’s XRP ETF ambitions. With my years of experience in this dynamic industry, I have learned to expect the unexpected, but the recent SEC filing by Ripple Labs Inc. has added an extra layer of uncertainty to the equation.

At an seemingly unusual moment, Bitwise opted to develop an ETF centered around XRP. The company recently submitted an S-1 registration document to the U.S. Securities and Exchange Commission (SEC). This submission has sparked discussions among experts about what may transpire regarding this filing. Some experts speculate that the regulatory body might reject the application, a conjecture supported by recent events between the SEC and Ripple Labs Inc.

Bitwise XRP ETF Approval Is Uncertain

Approximately one year past, Judge Analisa Torres made a ruling in the Ripple vs SEC case, determining that XRP is not classified as a security. This decision granted a partial success to the San Francisco-based company. Concurrently, the regulatory body also achieved a victory, as Judge Torres found that Ripple had breached securities laws by selling XRP to institutional investors without prior registration.

Two months ago, a court order required Ripple to pay a fine of $125 million as a result of the violation in the SEC lawsuit. Initially, neither party indicated an intention to contest the decision, yet legal experts predicted that appeals might occur.

The opportunity to contest the decision remained available until October 7, 2024, but it was set to close then. However, on October 2, the Securities and Exchange Commission (SEC) submitted an Appeal Notice, seeking to reclassify XRP as a security. This move has significantly impacted various narratives, including Bitwise’s plans for an XRP Exchange-Traded Fund (ETF).

Over an extended period, should this case favor the SEC, I find myself potentially facing the necessity of relinquishing our recently submitted XRP ETF proposal. This is due to the fact that if the Commission prevails in this matter, it would imply that XRP is classified as a security – a stance they have consistently maintained under Gary Gensler’s leadership.

The ambiguity could potentially alter the course, as commodities may become more likely to receive approval for Exchange-Traded Funds (ETFs).

Appeals Court Commentary on Past US SEC Cases

According to a post by Ripple’s Chief Legal Officer, Stuart Alderoty, it appears that Bitwise might not need to fret over the SEC potentially winning their appeal. Alderoty is quite optimistic that the Securities and Exchange Commission could experience another embarrassment at the Court of Appeals.

I’ve shared some past court responses that regulatory bodies have given us regarding our queries, as a fellow crypto investor.

In a court case between Aron Govil of Jacksonville, Florida, and the SEC, Alderoty referenced the SEC’s appeal. Some replies given in court were: “We don’t align with the SEC,” “We remain unconvinced,” regarding the SEC’s arguments, and “The counterarguments presented by the SEC are not convincing enough.

Lawyer Fred Rispoli anticipates a prolonged period before the approval of the XRP ETF, but he also predicts it will follow the same path as Grayscale’s Bitcoin ETF applications, which suggests that despite the lengthy delay, the Securities and Exchange Commission (SEC) is likely to eventually approve the offering.

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2024-10-04 21:50