SEC Drops Lawsuit Against Ripple, Clearing Path for XRP ETF

The U.S. Securities and Exchange Commission (SEC) has dropped its lawsuit against Ripple Labs, marking a significant turning point in the legal dispute between the two entities. This decision, announced on March 19, 2025, came just under a month before the final deadline for regulators to make a decision on the case. This move is seen as a pivotal moment for Ripple and its cryptocurrency, XRP, as it clears a major regulatory hurdle that has been hanging over the company for years.

The lawsuit, which began in December 2020, centered around allegations that Ripple had conducted an unregistered securities offering worth $1.3 billion. The legal proceedings have been closely watched by the cryptocurrency community, as the outcome could set a precedent for how other digital assets are regulated. In 2023, Federal District Judge Analisa Torres ruled that programmatic sales to public buyers and distributions of XRP to Ripple Labs employees did not constitute the sale of unregistered securities. However, she concluded that Ripple’s institutional sales of XRP did violate Section 5 of the Securities Act. In August 2024, Judge Torres ordered Ripple to pay a $125 million fine, significantly less than the $2 billion sought by the SEC. The SEC subsequently filed a notice of appeal in October 2024, but this latest development suggests that the appeal may be withdrawn.

The resolution of the lawsuit is expected to have a positive impact on the prospects for an XRP exchange-traded fund (ETF). According to an expert assessment, the approval of an XRP ETF is now just a matter of time. This optimism is bolstered by the fact that the SEC has delayed decisions on multiple crypto-asset ETF filings, including those for XRP, until May 2025. This delay is viewed as a standard procedure that all currently approved crypto-asset ETFs have undergone before. The expert's analysis suggests that the regulatory environment is becoming more favorable for cryptocurrencies, and the approval of an XRP ETF could be imminent.

Ripple CEO Brad Garlinghouse has expressed optimism regarding the approval of a spot XRP ETF by the end of 2025. In a conversation, Garlinghouse highlighted the growing acceptance of cryptocurrencies and the potential for regulatory clarity to drive further adoption. The resolution of the lawsuit against Ripple is seen as a significant step towards this goal, as it removes a major regulatory uncertainty that has been a barrier to the wider acceptance of XRP.

The approval of an XRP ETF would be a major milestone for the cryptocurrency industry, as it would provide investors with a regulated and accessible way to gain exposure to XRP. This could lead to increased liquidity and stability for the cryptocurrency, as well as greater mainstream adoption. The expert's assessment that the approval of an XRP ETF is just a matter of time is based on the current regulatory environment and the growing acceptance of cryptocurrencies. However, it is important to note that the approval process is subject to regulatory scrutiny and may still face challenges.

XRP is currently the third largest non-stablecoin crypto asset by market capitalization. Major ETF issuers will not overlook this fact. In previous news, Ripple agreed to waive its cross-appeal, with the SEC keeping $50 million out of the $125 million fine. The ETF Store President Nate Geraci stated on social media that the resolution of the Ripple case signifies that the approval of a spot XRP ETF is clearly just a matter of time. It is expected that BlackRock, Fidelity, and others will participate.