SEC Reviewing Grayscale's XRP ETF Bid: 81% Approval Likelihood

The U.S. Securities and Exchange Commission (SEC) is currently reviewing Grayscale's application to convert its XRP Trust into an exchange-traded fund (ETF), with a deadline set for October 18, 2025. The 240-day investigation, initiated on January 30, follows regulatory changes that have increased the likelihood of XRP ETF approval to 81%.

The SEC's review will focus on investor protection, market manipulation risks, and the regulatory status of XRP itself. The XRP token is the subject of a lawsuit between Ripple Labs and the SEC, which may have implications for the ETF's approval. Historically, the SEC has been cautious about approving altcoin ETFs due to concerns about price manipulation.

Grayscale is one of six issuers seeking XRP ETF approval, alongside Bitwise, Canary Capital, 21Shares, WisdomTree, and CoinShares. The Federal Register will soon publish these filings, indicating growing demand for altcoin-based ETFs. Recent regulatory feedback and management updates, including the appointment of Acting Chair Mark Uyeda, have fueled optimism for altcoin ETF approvals.

Grayscale has been a pioneer in advocating for crypto ETFs, having already converted its Bitcoin Trust into a spot Bitcoin ETF. However, the situation with the SEC regarding altcoin ETFs remains uncertain. Altcoin products face stricter parameters regarding liquidity, manipulation, and regulatory clarity, although some have been approved unlike Bitcoin-based ones.

As the October 18 deadline approaches, market participants are actively preparing for the SEC's decision. Approval would likely lead to increased trading and adoption volumes. A rejection or delay, however, would prompt further negotiations with regulators and impact future submissions. Regardless of the outcome, the decision will significantly shape the future of crypto ETFs and influence investment strategies in the digital asset class.