1. Multiple institutions are applying for ETF.
On October 2, a spokesperson for Bitwise confirmed that Bitwise submitted an XRP ETF application, which has been officially submitted on the Delaware government website. According to its S-1 registration filing submitted to the U.S. SEC for its XRP ETF, the XRP custodian will primarily use cold storage to hold the trust's assets and will transfer a limited amount of assets to hot storage as needed for effective basket creation and redemption. The cryptocurrency investment firm Canary Capital submitted a registration application for its XRP spot ETF 'Canary XRP ETF' to the U.S. SEC. It plans to provide investors with an investment channel that does not require direct holding of XRP, while using CME's CF Ripple index as a price tracking benchmark. Its founder, Steven McClurg, stated that the positive changes in the regulatory environment and the demand from investors for diversified crypto assets are the main reasons driving this application.
On October 16, Grayscale Investments submitted an application to the U.S. SEC to convert its mixed crypto fund Digital Large Cap Fund (GDLC) into an exchange-traded fund (ETF). As of September 30, the fund was primarily composed of Bitcoin, accounting for 74.7%, followed by Ethereum at approximately 18.55%, with the remainder consisting of SOL, XRP, and AVAX. The company had previously converted its Bitcoin and Ethereum funds into ETFs.
On November 2, 21Shares submitted an XRP ETF application '21Shares Core XRP TRUST' to the U.S. SEC.
These continuous applications indicate that XRP's market position as a crypto asset is steadily recovering, reflecting market confidence in XRP's future potential. After Ripple's legal disputes with the SEC made some progress, concerns about XRP's legality have eased. Against the backdrop of the approval of Bitcoin and Ethereum ETFs, the wave of XRP ETF applications is undoubtedly an important signal for the industry moving forward.
However, Bloomberg ETF analysts believe it will not be approved immediately: On November 26, according to Coingape, Bloomberg ETF analyst James Seyffart's latest report pointed out that the approval decisions for altcoin ETFs such as SOL, XRP, LTC, and HBAR may extend until the end of 2025. Unlike the already approved Bitcoin and Ethereum ETFs, these altcoins lack the support of a regulated futures market by CME. Although WisdomTree and 21Shares have submitted XRP ETF applications, current regulations still do not allow for their listing until issues of market manipulation, custody, and other compliance matters are resolved. Seyffart also stated that the new SEC leadership in 2025 may be more friendly towards cryptocurrencies, potentially allowing ETF products to include staking features.
2. Positive news from the SEC lawsuit
On July 13, 2023, when the court ruled that the sale of XRP on digital trading platforms is not considered a security, Ripple achieved a partial victory. However, the court ruled that the XRP sold by Ripple to institutional investors was classified as unregistered securities. Additionally, the court ruled that the personal XRP sales of Garlinghouse and Larsen did not constitute violations. On August 7, 2023, the court made a final ruling, ordering Ripple to pay a civil penalty of $125.0351 million and prohibiting the company from further violations of securities law.
On October 3, the U.S. SEC stated that it is appealing the previous ruling by the U.S. Second Circuit Court of Appeals regarding Web3 payment company Ripple. An SEC spokesperson stated that 'the district court's ruling in the Ripple case conflicts with decades of precedent set by the Supreme Court and securities law, and we look forward to presenting our case in the Second Circuit Court.'
However, with Trump's election victory, this regulation may be eased.
On November 22, according to the official website of the U.S. SEC, SEC Chairman Gary Gensler will officially step down on January 20, 2025. The market is beginning to have high expectations for changes in the future regulatory environment, and lawsuits against companies like Ripple may soften, settle, or even be withdrawn.
Gary's long-standing strict regulation of the crypto industry, especially Ripple, has kept XRP in a dual dilemma of legal and market issues. Now, there are signs that this regulatory stance may be loosening, giving the market an opportunity to reassess the value of XRP.
According to data from CoinGlass, the XRP futures open interest has reached $4.174 billion, setting a new historical high. This data reflects the unprecedented speculative enthusiasm for XRP in the market.
