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Cryptocurrency News Articles
Ripple’s CLO Calls Out SEC’s Losing Track Record as Bitwise’s XRP ETF Hangs in the Balance
Oct 05, 2024 at 11:06 pm
This ongoing legal tussle is another twist in the evolving story of regulatory oversight. Whether the SEC's latest move will ultimately block Bitwise's ambitions remains to be seen.
United States crypto firm Bitwise Asset Management recently filed an application with the Securities and Exchange Commission (SEC) to launch an exchange-traded fund (ETF) that will track the performance of XRP. However, this move could face challenges in light of the SEC’s ongoing efforts to reclassify XRP as a security.
Bitwise’s initiative to register the XRP ETF with the SEC has sparked fresh discussions within the cryptocurrency community. Many are speculating on whether the upcoming regulatory hurdles might ultimately thwart this high-stakes venture.
The timing of Bitwise’s ETF filing coincides with the SEC’s reignition of its legal battle against Ripple Labs, the company behind XRP.
Last year, Judge Analisa Torres ruled that XRP was not a security in its sales to retail investors, which marked a partial victory for Ripple in the protracted legal dispute. However, the court also ruled that Ripple had violated securities laws by selling XRP to institutional investors without proper registration, handing the SEC a partial win in the case.
As a consequence, Ripple was hit with a $125 million penalty. Initially, both parties seemed inclined to accept the mixed ruling. But as the deadline for an appeal approached, the SEC filed a notice on October 2 to contest the classification of XRP.
If the Commission succeeds in its appeal, Bitwise’s XRP ETF could encounter significant obstacles. A ruling that classifies XRP as a security would make it challenging to obtain regulatory approval for the product.
Ripple’s CLO highlights SEC’s losing track record
Despite recent developments, Ripple’s Chief Legal Officer Stuart Alderoty appears relatively unfazed. He recently took to social media to highlight previous instances where courts have pushed back on the SEC’s arguments.
According to Alderoty, past rulings suggest that the appeals court may once again be skeptical of the SEC’s stance. He pointed to the regulator’s prior battle with Aron Govil, in which the court responded to the regulator’s arguments with statements like “We do not agree with the regulators” and “The SEC’s counterarguments are unavailing.”
Crypto attorney Fred Rispoli also shared his insights, speculating that Bitwise’s ETF might follow a similar trajectory to Grayscale’s Bitcoin ETF, which faced multiple delays before finally securing approval. Rispoli suggests that while the SEC may prolong the process, it could ultimately grant approval to Bitwise—although the timeline for this remains uncertain.
This ongoing legal clash marks the latest development in the evolving narrative of regulatory oversight. Whether the SEC’s latest move will ultimately block Bitwise’s ambitions remains to be seen, but one thing is clear: this high-stakes showdown will set the stage for the future of cryptocurrency ETFs in the United States.
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