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SEC Set to Rule on Grayscale's XRP ETF, Legal Battle Looms

Coin WorldWednesday, Feb 12, 2025 10:41 am ET

1min read

The U.S. Securities and Exchange Commission (SEC) is expected to acknowledge Grayscale's XRP ETF filing as early as Thursday, according to a report by FOX Business journalist Eleanor Terrett. This move is highly anticipated as it would provide insight into how the SEC currently views XRP, a crypto asset that has been at the center of a long-standing legal battle between Ripple and the SEC over its classification.

On behalf of Grayscale, NYSE Arca submitted a 19b-4 form to the SEC last month, seeking rule change approval to list and trade shares of Grayscale's XRP ETF. The SEC usually has around 15 days to accept an application for review. The filing came just a few months after the asset manager launched its XRP trust product, as the legal battle between the SEC and Ripple approached the finish line.

A court ruling in August determined that XRP tokens were not securities when sold to retail investors on exchanges, but were securities when sold to institutions, resulting in a $125 million fine for Ripple. The SEC has appealed the case's ruling, and Ripple is fighting back. The case has since been extended and moved to the Court of Appeals for the Second Circuit, with Ripple requesting an April 16, 2025, deadline to file its response brief.

These legal obstacles will likely impede all attempts to launch an ETF tied to the fourth-largest crypto asset by market cap, not only Grayscale's. A number of fund managers looking to launch their respective XRP ETFs include WisdomTree, Bitwise, 21Shares, and Canary Capital. The CBOE Exchange lodged separate 19b-4s for their proposed funds last week.

Analysts anticipate Litecoin to spearhead spot crypto ETF approvals, well ahead of XRP, Solana, and Dogecoin ETFs, due to its classification as a commodity by the CFTC, which generally removes it from the SEC's regulatory purview. Analysts estimate a 90% chance of Litecoin ETF approval this year.

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