The U.S. Securities and Exchange Commission (SEC) has officially rejected WisdomTree’s application for a spot XRP ETF. The fund, which was proposed to be listed on the Cboe BZX Exchange with the Bank of New York Mellon as its administrator, has failed to gain regulatory approval. This marks yet another instance of the SEC’s skepticism toward cryptocurrency spot ETFs.
Why the SEC Rejected Spot XRP ETF
The SEC’s rejection of the WisdomTree $XRP Fund follows a familiar narrative. The commission cited concerns over market manipulation, inadequate investor protection, and the lack of proper surveillance mechanisms. These reasons echo the SEC's past rejections of spot Bitcoin and Ethereum ETF applications, emphasizing the regulatory body’s cautious stance on approving such products.
Why XRP’s Approval Could Be a Market Shock
The rejection isn’t just about XRP; it carries implications for the broader cryptocurrency market:
▫️ Systemic Risks: If a spot XRP ETF were to gain approval, it could pave the way for speculative market behaviors, destabilizing Bitcoin and Ethereum prices.
▫️ Market Crashes: Analysts speculate that approving a spot XRP ETF could trigger a significant crash in Bitcoin, Ethereum, and even XRP itself, as the influx of institutional players could manipulate liquidity and price movements.
▫️ Regulatory Consistency: Approving XRP while continuing to reject Bitcoin and Ethereum ETFs would create regulatory inconsistencies, undermining the SEC’s credibility.
A Strategic Delay?
Critics argue that the SEC’s repeated rejections are not just about regulatory compliance but also a strategic move to delay institutional adoption until clearer guidelines are established. For XRP, this means its path to a spot ETF remains fraught with challenges.
Conclusion
The rejection of WisdomTree’s spot XRP ETF underscores the SEC’s unwavering stance on crypto ETFs. While the dream of a spot ETF for XRP, Bitcoin, or Ethereum remains alive, the road ahead is riddled with regulatory and market hurdles. For now, XRP’s ETF ambitions—and the broader market implications—remain in limbo.
