Bitwise Asset Management has made a bold move by officially filing for an $XRP exchange-traded fund (ETF) in Delaware.
This decision has caught the attention of the cryptocurrency world as it comes at a time when $XRP’s regulatory status in the US is still unclear.
The filing for the XRP ETF was made under the name “Bitwise XRP ETF” in Delaware on 30 September. The filing is publicly available on the Delaware Department of State website.
Bitwise used CSC Delaware Trust Company as its registered agent, a company that helps businesses with legal and corporate compliance.
Delaware is often chosen for filings like this because of its business-friendly environment. BlackRock, a major financial firm, also filed for its Ethereum ETF in Delaware last year.
The latest filing suggested Bitwise is serious about launching an XRP ETF, despite the challenges of gaining approval from US regulators.
The President of the ETF Store, Nate Geraci, commented on the filing, saying, “Bitwise positioning to file for XRP ETF is highly noteworthy… This is strategic”. Bitwise is known for being cautious and strategic in its decisions, so this move has stirred interest.
However, it’s uncertain how the US Securities and Exchange Commission (SEC) will respond. While Bitwise is a well-respected company, and $XRP has its supporters, it is not seen as the most likely candidate to be the next approved crypto ETF.
Ripple ruling could affect ETF approval
The SEC’s ongoing legal battle with Ripple, the company behind $XRP, is a key factor in determining the success of Bitwise’s $XRP ETF.
In July 2023, a judge ruled that sales of $XRP on secondary markets, like exchanges, do not qualify as securities. This was a victory for Ripple, but the SEC has not accepted the decision.
The Head of Research at Galaxy Digital, Alex Thorn, believes the success of Bitwise’s ETF depends on whether the SEC appeals this ruling. According to Thorn, if the SEC does appeal, the chances of Bitwise’s ETF being approved “drop to near zero”.
The SEC has until 7 October 2024 to decide if it will appeal the ruling. If they do, the case could drag on until 2025, further delaying any approval for an $XRP ETF.
Ripple’s CEO, Brad Garlinghouse, stood optimistic about the future of XRP ETFs. He said, “It’s just a matter of time… there’s gonna be an XRP ETF”. Despite this confidence, the SEC’s stance remains a significant hurdle.
The SEC has already expressed its dissatisfaction with the Ripple ruling, describing it as “wrongly decided” in another court case involving Terraform Labs.
Former SEC lawyers believe the agency will most likely challenge the ruling, as many within the SEC see it as flawed.
Should the SEC decide to appeal, Ripple will face more legal challenges, and Bitwise’s ETF plans could be put on hold for an extended period.
Political uncertainty adds to the mix
Another factor that could influence the outcome of the $XRP ETF is the upcoming US presidential election.
Bloomberg ETF analyst, Eric Balchunas, speculated that if Kamala Harris wins the 2024 election, $XRP ETFs might face additional challenges. “XRP ETFs would face dismissal if Kamala Harris wins the White House,” Balchunas said.
Harris has shown interest in supporting new technologies like cryptocurrency. Some leaders in the crypto industry, including Ripple co-founder, Chris Larsen, have even expressed their support for her. However, it remains unclear how a Harris administration would approach crypto regulation.
Thorn added that while the SEC may appeal the Ripple ruling soon, a change in political leadership could affect how the case is handled. He commented, “I’ll be shocked if they don’t appeal before next Tuesday”.
For now, Bitwise is moving forward with its $XRP ETF plans, but much depends on the SEC’s actions and the potential political changes that could come after the 2024 election.
