Investment Asset Management Bitwise has chosen to pursue an XRP ETF product at a very strange time. The company recently filed for S-1 registration with the U.S. Securities and Exchange Commission (SEC). The application has already sparked speculation among experts about what its future holds. Many have speculated that regulators will block the filing, a stance informed by recent developments between the SEC and Ripple Labs.
Approval of XRP ETF per bit is uncertain
About a year ago, Judge Annalisa Torres ruled in Ripple v. SEC that XRP is not a security. With this verdict, the judge awarded a partial victory to the San Francisco-based company. The regulator also secured a victory when Judge Torres ruled that Ripple violated securities laws when it sold XRP to institutional investors without registration.
For this violation, Ripple was ordered to pay a $125 million fine by the same judge in an SEC lawsuit two months ago. Although neither party initially indicated any intention to appeal the verdict, experts had foreseen an appeal.
The appeal window remained open but was scheduled to expire by October 7, 2024. Ultimately, the SEC filed a notice of appeal on October 2 challenging XRP’s security status. This filing changed a number of narratives, including Bitwise’s XRP ETF ambitions.
In the long run, if this appeal is in the SEC’s favor, Bitwise may have to exit its newly filed XRP ETF. This is because a victory for the Commission on this issue means that XRP is safe, as the Commission has always maintained under the leadership of Gary Gensler.
This uncertainty could change its trajectory as the commodity becomes more likely to win ETF approval.
Appellate Court Commentary on Past US SEC Litigation
A post by Ripple CLO Stuart Alderroti suggests that Bitwise may not need to worry about winning the SEC’s appeal. Ripple executives are extremely confident that the SEC may face another disgrace in the Court of Appeals.
He asked X to share some of the responses the regulator had received from courts in the past.
Alderoti cited the SEC’s appeal in the case with Aaron Govil of Jacksonville, Florida. When the case went to court, responses such as “we disagree with the SEC”, “we are not persuaded by the SEC’s arguments”, and “the SEC’s arguments are invalid” were submitted.
Lawyer Fred Rispoli believes the XRP ETF will have a long wait, but he also believes it will follow the same path as the Grayscale BTC ETF, which ended its filing. This means that no matter how long the delay lasts, the SEC will eventually approve the proposal.
Read more: Bitwise file of another ETF after XRP ETF filing
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Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about the real-world applications of blockchain technology and the innovations driving public acceptance and global integration of emerging technologies. His desire to educate people about cryptocurrencies has inspired his contributions to well-known blockchain-based media and sites. Benjamin Godfrey loves sports and farming. please follow him TwitterLinkedIn
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