After the approval of Bitcoin and Ethereum ETFs, will the SEC also give Ripple the green light? l Source: Jakub Porzycki/NurPhoto via Getty Images
Key Takeaways
- The approval of Bitcoin and Ethereum ETFs has investors looking to see which asset might be next.
- The market expects ETFs based on Solana and Ripple to be the next ones to debut.
- Grayscale, Canary, and Bitwise may launch the first XRP ETF.
This year’s green light for spot Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) in the U.S. has fueled speculation about which other cryptocurrencies’ ETFs will be the next to receive regulatory approval.
Many experts think Ripple and Solana may be the next ones.
Now, asset managers are racing to file for an XRP ETF as they wait for regulatory clarity post-elections.
Canary Capital Joins ETF Race
Canary Capital, a crypto investment firm led by former Valkyrie CIO Steven McClurg, has applied with the U.S. Securities and Exchange Commission (SEC) to launch the “Canary XRP ETF,” a spot exchange-traded fund (ETF) for XRP.
This filing marks the second application for an XRP ETF in the U.S., following Bitwise’s earlier submission.
The Canary XRP ETF aims to provide investors with easier access to XRP through traditional brokerage accounts, eliminating the potential challenges and risks associated with directly acquiring and holding the digital asset.
XRP’s price edged up 0.5% to $0.5298 after the Canary Capital update, boosting its market capitalization to $30.0 billion.
SEC Has 240 Days To Respond
A Canary Capital spokesperson told Fox Business : “We’re seeing encouraging signs of a more progressive regulatory environment coupled with growing demand from investors for sophisticated access to cryptocurrencies beyond Bitcoin and Ethereum—specifically investors seeking access to enterprise-grade blockchain solutions and their native tokens such as XRP.”
The SEC has a maximum of 240 days to respond to an S-1 filing for an ETF. This means the commission has until June 2025 to decide.
Bitwise Files For XRP ETF
After months of speculation and a fake BlackRock XRP ETF filing making the rounds, crypto asset manager Bitwise eventually filed for a spot XRP ETF on Oct. 1.
Bitwise filed its application with the Division of Corporations in the State of Delaware. The filing invoked a sense of euphoria among the XRP community, given that XRP was delisted from all U.S. exchanges three years ago.
ETF analysts lauded Bitwise’s efforts but believe the spot XRP ETF filing is a short-term bet on the upcoming U.S. elections and the hope of regulatory clarity post-election.
Bloomberg analyst Eric Balchunas said any altcoin spot ETF filing prior to the November Presidential election is a short call on Trump’s win. He added that if Democratic Presidential candidate Kamala Haris wins, the chances of approval go down heavily.
Grayscale to Launch First U.S. XRP Trust
Grayscale Investments is set to announce the launch of the U.S.’s first XRP trust.
This closed-end fund will provide accredited investors with direct exposure to XRP, the native token of the XRP Ledger, a blockchain network primarily used for cross-border payments.
While trust and an exchange-traded fund (ETF) are distinct investment products, Grayscale’s XRP trust could potentially evolve into an ETF in the future.
The company has outlined a four-phase product life cycle, leaving open the possibility of obtaining the necessary regulatory approvals to convert the trust into an ETF.
Ripple’s CEO, Brad Garlinghouse, said : “Was (pleasantly) surprised to see this news…though inevitable, as well?! As I’ve said before, with XRP having regulatory clarity in the U.S. and other countries, I expect it’s only a matter of time for this space to grow.”
A Ripple ETF Is “Inevitable”
While the market anticipates that Solana or Ripple will be the next cryptocurrency to receive U.S. Securities and Exchange Commission (SEC) approval for an ETF, Ripple’s CEO has asserted that an ETF for various crypto assets is “inevitable.”
Garlinghouse forecasts that many other cryptocurrencies will soon have similar investment vehicles. The Ripple CEO is optimistic about the crypto market reaching a $5 trillion valuation, buoyed by the recent approvals of spot Bitcoin and Ethereum ETFs in the U.S.
He also highlighted his belief in a range of successful projects within the cryptocurrency space, each contributing uniquely to decentralized finance and the digital asset industry.
Interestingly, he’s not the only crypto-famous face to have shared this positive sentiment over further ETF approvals. Earlier this year, Blackrock’s CEO Larry Fink was questioned about the potential release of an XRP ETF.
Although Fink declined to comment, his response fueled speculation within the XRP community that Blackrock might be considering such a financial product.
Is BlackRock Involved?
Garlinghouse has hinted at a potentially groundbreaking collaboration between BlackRock and Ripple to launch an XRP ETF in the USA. This development could significantly impact the cryptocurrency market and enhance XRP’s standing in the financial world.
He stated, “We think it makes sense for the XRP community overall,” suggesting that this move would benefit XRP holders and the broader crypto ecosystem. If realized, this ETF could provide greater accessibility and legitimacy to XRP, attracting more institutional investors and increasing market confidence.
Such a partnership with BlackRock, a global investment management giant, underscores cryptocurrencies’ growing acceptance and integration into mainstream financial products. The potential launch of an XRP ETF could pave the way for further innovation and adoption in the digital asset space, marking a significant milestone for Ripple and its community.
Ripple vs. SEC
The United States Southern District Court of New York adjudicated the SEC vs. Ripple case . In 2020, the SEC accused Ripple, the blockchain developer behind the XRP cryptocurrency and two top managers, of raising over $1.3 billion through an unregistered securities offering in 2013.
Ripple countered these allegations by citing past comments from an SEC director to argue that XRP should not be classified as a security.
The SEC contended that Ripple failed to file the registration documents. These are necessary documents for companies seeking to raise capital from the public. The regulator further claimed that Ripple “created an information vacuum,” selectively disclosing information at its discretion.
On July 13, 2023, the court ruled that XRP, like all cryptocurrencies, is not a security when sold to the public on an exchange.
Still, it is considered a security when sold to institutional investors. By October 2023, the SEC dropped all charges against Ripple’s executives. However, it continued to pursue remedies for the alleged unregistered securities sales.
In May 2024, the SEC submitted its final response regarding the sought remedies. The watchdog asserted that Ripple’s profits were ill-gotten and that the company’s defenses did not align with the evidence presented against it.
SEC Appeals
The U.S. Securities and Exchange Commission (SEC) unexpectedly appealed its ongoing lawsuit against Ripple on Oct. 3.
This move could significantly prolong the four-year legal battle, which seemed to be nearing a resolution following a partial victory for both parties.
The SEC’s appeal targets Judge Torres’s July ruling, but the specific aspects being challenged remain unclear. This ambiguity has sparked speculation about whether the SEC aims to overturn the $125 million fine or the court’s broader determination that programmatic sales of XRP to retail customers do not constitute a securities transaction.
A source close to the matter has indicated that the SEC’s appeal is likely focused on the latter aspect of the ruling.
Settlement Payment Paused
The ongoing legal battle between Ripple Labs and the SEC may not be over.
Despite the recent conclusion of their court case, both parties have agreed to pause the final judgment payment, suggesting that appeals from either side may be on the horizon.
In a recent filing , Ripple requested a delay in the $125 million payment that was due on Friday, Sept. 6.
The SEC agreed to this pause, allowing both parties to consider their next steps. As part of the agreement, a law firm will hold 111% of the payment amount in escrow for 30 days after the appeal window closes or until any appeal is over.
While neither Ripple nor the SEC has publicly announced plans to appeal the court’s final judgment, the decision to pause the payment suggests that such an appeal may be in the works.
Garlinghouse has previously denied any intention to appeal, but the company’s recent actions suggest a change of heart.
An appeal from either party would likely prolong the legal battle and could have significant implications for the broader cryptocurrency market. For the SEC, an appeal could establish a precedent for their other ongoing crypto-related lawsuits.
Stablecoin Before ETF
The future of a Ripple ETF remains uncertain. However, Ripple President Monica Long fueled speculation about the potential launch of a Ripple stablecoin later this year.
In an interview , Long provided insights into the development and prospective launch of Ripple’s stablecoin. Although specific details about the launch date and features aren’t public yet, she hinted that the crypto community could expect a possible release by year-end.
Long emphasized the significant role of stablecoins in the volatile crypto market. She noted their multi-billion dollar market capitalization. She also highlighted their reliability as a payment option for users seeking to move and store assets securely.
This announcement came during the XRP Las Vegas conference held on May 3-4. Ripple’s Chief Technology Officer, David Schwartz, shared updates on the company’s upcoming integrations. These include the XRP Ledger’s automated market makers (AMMs), the lending protocol, and the development of Ripple’s stablecoin.
Ripple’s proposed stablecoin will be backed 1-to-1 by U.S. dollar deposits, U.S. government bonds, and other low-risk investments. The XRP community enthusiastically responded to the news of the stablecoin’s development.
According to the company’s recent announcement, the introduction of a stablecoin aims to enhance use cases, liquidity, and opportunities for developers and users. This would provide a more reliable alternative to existing stablecoins like Tether (USDT) and Circle (USDC).
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