Will Bitwise’s Spot XRP ETF Gain SEC Approval Amid Ripple’s Legal Appeal?

Financial giants Bitwise have submitted an official request seeking approval from the Securities and Exchange Commission (SEC) to trade spot XRP exchange-traded funds (ETFs). If Bitwise’s request is granted, the firm will hold XRP ETFs, similar to its Bitcoin and Ethereum ETF offerings. This development comes as the SEC remains unsatisfied with the recent ruling classifying XRP as a non-security.

According to the submitted paperwork, the Trust will take custody of XRP and evaluate the total value of its assets using the CME CF Ripple-Dollar Reference Rate—New York Variant correlation.

CF Benchmarks Ltd. is responsible for calculating and fixing the benchmark prices. The price mechanism will rely on the total traded volume of XRP on several of the most popular exchanges. Although Bitwise’s application for XRP ETFs is still in the early stages of the approval process, SEC Chair Gary Gensler has shown reluctance to approve other crypto assets beyond Bitcoin and Ethereum.

It’s worth recalling that in January, following the approval of the Bitcoin ETF, Gensler discouraged the belief that the approval signaled the SEC’s positive stance on other cryptocurrencies under federal securities laws governing crypto asset compliance. While details of the proposal are still limited, it is believed that if approved, investors will gain the opportunity to trade XRP ETFs alongside other derivatives without worrying about entry barriers or the risks associated with holding XRP directly. The Trust also stated it would avoid derivatives that expose it to credit risks or involve counterparties.

Although VanEck filed a request to trade Solana ETFs earlier this year, Bitwise is the first crypto asset management firm to seek approval for XRP ETF trading.

In a related matter, the long-standing face-off between the SEC and Ripple is taking a new turn as the SEC has filed an appeal. Judge Analisa Torres’s ruling last year stated that XRP sales were not classified as securities, but recent developments suggest this may need to be revisited, especially due to challenges related to institutional XRP sales. Ripple is expected to respond with a cross-appeal.