- Bitwise formally requested to launch a spot XRP ETF, potentially reshaping Ripple’s market stance.
- Approval could herald new crypto ETFs, with impacts extending beyond Ripple to broader markets.
Bitwise, a company specializing in cryptocurrency-based investment funds, has formally applied to launch an ETF based on XRP, the digital currency native to Ripple’s network. This signals Bitwise’s venture into potentially new terrain in the realm of digital currency investment vehicles.
Bitwise Eyes XRP ETF Potential
The initial reports surfaced after Bitwise’s application with the Delaware Division of Corporations, proposing an entity named Bitwise XRP ETF. While this could hint at the imminent launch of the product, Bitwise’s Chief Investment Officer, Matthew Hougan, confirmed the registration during an interview with The Block:
“We can confirm that this is a registration made by us. It’s a trustee registration in Delaware. More details and comments will be shared tomorrow,” Hougan stated.
Currently, the application does not appear to have been submitted to the U.S. Securities and Exchange Commission (SEC), the regulatory body that has the final say on spot-based digital currency ETFs. Earlier this year, the SEC approved the launch of Bitcoin-related products, and in July, it authorized Ethereum-linked funds.
Challenges Ahead for Crypto ETFs Predicting the success of a spot XRP ETF might be premature, particularly given the complex backdrop of the SEC’s prolonged battle with Ripple Labs. The SEC’s legal skirmish did not end entirely in its favor, as it was determined that the presale of the token did not qualify as unregistered securities trading, at least among retail investors.
The SEC managed a partial victory in this case by acknowledging that there were violations in token trading among institutional investors. Consequently, after several weeks of dispute, the agency settled with Ripple on a $125 million fine, concluding the legal battle.
The prospect of seeing more spot crypto ETFs is bleak, not only for Ripple but generally across the sector. Analysts deem it unlikely that other digital currencies will see similar products in the short term. Beyond Bitcoin and Ethereum, other digital currencies have smaller market caps, implying lower liquidity.
As Bitwise moves forward with plans for an XRP-based fund, entities like VanEck and 21Shares are pursuing a Solana spot ETF. However, these efforts face hurdles that diminish their likelihood of entering the U.S. market.
Lastly, these applications arrive at a time when the SEC might undergo a leadership change. Analysts speculate that if either Donald Trump or Kamala Harris wins the next election, Gary Gensler might leave his position at the SEC, potentially making way for a new chairperson with a more crypto-supportive stance.
