Bitwise seeks approval for first spot XRP ETF despite regulatory uncertainty

Market observers are uncertain if the SEC would approve additional crypto-focused ETFs soon.

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Bitwise has filed an application with the United States Securities and Exchange Commission (SEC) for the first spot XRP exchange-traded fund (ETF), according to an Oct. 2 statement.

The proposed ETF aims to directly hold XRP. It is currently pending the effectiveness of its Form S-1 registration and the approval of Form 19b-4.

Bitwise’s XRP ETF would build on the firm’s success with other crypto-based funds, including spot Bitcoin and Ethereum ETFs launched earlier this year.

Why XRP ETF?

Bitwise said it chose XRP due to its ability to facilitate cross-border payments and its strong ecosystem. The firm highlighted that the XRP Ledger (XRPL) supports institutional participation in DeFi and offers compatibility with the Ethereum Virtual Machine (EVM).

The company also highlighted XRP’s large number of active wallets and its status as one of the world’s leading crypto.

Bitwise CEO Hunter Horsley emphasized the firm’s belief that blockchains will create new, apolitical monetary assets and permissionless applications for the 21st century. He added:

“For the past seven years we’ve helped investors access the opportunities in the space, and we’re excited to continue that work with our filing for a Bitwise XRP ETP.”

Ripple CEO Brad Garlinghouse also weighed in, stating that the application signals the growing confidence of traditional financial institutions in XRP. He stated:

“This move underscores the growing trust & integration of digital assets like XRP into traditional finance, marking the continued adoption and maturation of the crypto market. I sense this is just the beginning.”

Notably, this development comes less than a month after Grayscale Investments launched a new XRP-focused crypto investment trust.

Will it be approved?

Market analysts have expressed doubts about the possibility of the XRP ETF’s approval under the current US regulatory environment.

Additionally, Ripple’s ongoing legal battle with the SEC further complicates the approval process. Galaxy Digital’s Head of Research Alex Thorn said:

“SEC has until next week (Oct. 7) to appeal Judge Torres’ July 2023 ruling (which held that secondary sales of XRP through exchanges were not securities) likelihood of this ETF filing succeeding drops to near zero if they do appeal (i’ll be very surprised if they don’t appeal).”

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