What to Take Away
- To establish a spot XRP exchange-traded fund (ETF), cryptocurrency asset manager Bitwise submitted a registration statement to the Securities and Exchange Commission (SEC) on Wednesday.
- The outcome of a possible SEC appeal of a ruling in 2023 stating that XRP trades were not securities transactions may partly determine approval of the XRP ETF, which is based on the Ripple Labs crypto token.
- Bitwise acknowledged in its filing the potential threat to the proposed ETF posed by the upcoming security classification of XRP.
To launch a spot XRP exchange-traded fund (ETF) that would provide investors with direct exposure to Ripple Labs’ XRP (XRPUSD) crypto token, crypto index fund manager Bitwise submitted an S-1 registration statement to the Securities and Exchange Commission (SEC) on Wednesday.
Contrary to previous assertions made by the SEC, Bitwise made it clear in the filing that XRP is not a security and that it operates on a decentralized ledger, which typically has the potential to improve accountability, security, and accessibility. The filing says that Coinbase Custody will be the custodian and BNY Mellon will be the trust’s administrator and transfer agent.
The SEC’s appeal deadline in the XRP ruling is getting closer.
The filing comes at a time when the SEC and Ripple are still fighting over whether or not XRP should be considered an unregistered security. A federal court decision from 2023 stating that secondary sales of XRP through crypto exchanges are not securities transactions must be appealed by the SEC by Monday, Oct. 7.
Alex Thorn, head of research at Galaxy Digital, says that it would be surprising if the SEC doesn’t appeal the decision. Bitwise acknowledged the ongoing litigation in its filing, noting that if XRP is deemed a security by the courts, it could force the liquidation of the proposed trust under certain conditions. The success of such an appeal would effectively eliminate the chances of approval for this ETF proposal, he posted Tuesday on the social media platform X.2. Bitwise has already launched spot bitcoin and ether ETFs in the United States, in addition to this new filing for an XRP ETF.3
