Securities and Exchanges Commission (SEC) Set Deadline for Decision on XRP Exchange-Traded Fund (ETF)
Introduction
The Securities and Exchanges Commission (SEC) has set a deadline for a decision on whether it will allow an exchange-traded fund (ETF) tracking the price of XRP (XRP). This significant development comes after the agency acknowledged a 19b-4 filing by the New York Stock Exchange (NYSE) and asset manager Grayscale, which is the first time it has responded to a filing regarding the crypto asset.
Background
The SEC has previously acknowledged several other applications for crypto-focused ETFs, including those for Solana (SOL), Litecoin (LTC), and Dogecoin (DOGE). However, this latest acknowledgement is significant given the SEC’s ongoing lawsuit against Ripple, the issuer of XRP.
In December 2020, the SEC sued Ripple for allegedly violating U.S. securities laws by selling XRP as an unregistered security to raise funds. Ripple won the court case partially in August 2023, with the judge ruling that XRP was not a security when sold on secondary markets. The SEC, however, filed an appeal in the case on January 15, arguing that Ripple’s approach to selling XRP met the tenets of the Howey Test, a Supreme Court precedent used as a common standard for identifying securities.
Commentary
Nate Geraci, President of the ETF Store, commented on the development, stating, "They could have easily rejected this filing. Enormous message [in my opinion.]"
ETF Analyst Predictions
Last week, Bloomberg ETF analysts James Seyffart and Eric Balchunas predicted a 65% chance for an XRP ETF to be approved by the end of 2025. The two analysts gave the highest chances to a LTC ETF (90%), followed by DOGE (75%) and SOL (65%). All of the current outstanding ETF applications for those assets will receive a decision in October.
Conclusion
The SEC’s acknowledgement of the 19b-4 filing by the NYSE and Grayscale marks a significant step forward for the potential listing of an XRP ETF. With the agency’s ongoing lawsuit against Ripple and the recent court ruling, the outcome of this development is eagerly anticipated.
FAQs
- What is an exchange-traded fund (ETF)?
An ETF is an investment fund that tracks the performance of a particular index, sector, or asset class, and is traded on a stock exchange like a stock.
- What is XRP (XRP)?
XRP is a cryptocurrency developed by Ripple, a company that offers a payment network for financial institutions to send and receive payments globally.
- What is the SEC’s stance on XRP?
The SEC has filed a lawsuit against Ripple, alleging that the company sold XRP as an unregistered security. Ripple has won the court case partially, with the judge ruling that XRP is not a security when sold on secondary markets. The SEC has appealed the case.
- What is the potential impact of an XRP ETF on the cryptocurrency market?
The listing of an XRP ETF could increase exposure to the cryptocurrency, potentially leading to increased trading volumes and prices. However, the outcome is uncertain, and the SEC’s decision will depend on various factors, including the company’s financial health and the overall market conditions.
