WisdomTree Withdraws Its Spot XRP ETF S-1 Registration Statement

WisdomTree has withdrawn its application for a spot XRP exchange-traded fund (ETF) from the U.S. Securities and Exchange Commission (SEC). The firm submitted the 19b-4 filing earlier in 2024, but chose to withdraw it in January 2026 without providing a public explanation. The decision adds to the broader uncertainty surrounding the regulatory approval of spot crypto ETFs, particularly for tokens like XRP with unresolved legal classifications according to reports. The move reflects the ongoing challenges asset managers face in navigating the SEC's stringent standards for digital asset products.

The SEC has approved several futures-based crypto ETFs but has repeatedly denied or delayed approvals for spot ETFs, citing concerns over market manipulation and custody issues. For XRP, the ongoing litigation between the SEC and Ripple Labs further complicates the regulatory landscape. Until a court ruling on XRP's status as a security is reached, asset managers face heightened uncertainty in pursuing spot ETFs. This regulatory ambiguity has led WisdomTree to step back from its application.

The news caused XRP's price to drop nearly 6% on January 6, 2026. Investors interpreted the withdrawal as a sign of continued regulatory hurdles for altcoin ETFs and reduced expectations for near-term product launches. Despite the setback, XRP ETF inflows remain strong, with competing funds attracting $1.25 billion in net capital. This indicates ongoing demand for regulated exposure to XRP, even in the absence of a WisdomTree product according to analysis.

Why Did This Happen?

WisdomTree likely chose to withdraw its XRP ETF application to avoid a potential rejection by the SEC. The firm cited Rule 477 of Regulation C to formally request the withdrawal of its registration statement. No shares were sold under the proposed fund, and the company stated it had "determined not to proceed at this time." Analysts suggest the decision was strategic, allowing WisdomTree to avoid public scrutiny or reputational damage from a denied application.

The firm's decision aligns with broader industry trends. Many asset managers are waiting for the outcome of the SEC's Bitcoin ETF applications and the Ripple case before proceeding with altcoin ETFs. By stepping back, WisdomTree may be signaling its intention to reassess its approach once the regulatory environment becomes clearer.

How Did Markets Respond?

XRP experienced increased volatility following the withdrawal of WisdomTree's application. The token fell to $2.28, below its 2025 peak, as investors reacted to the news. Technical indicators suggest a potential rebound, but support levels near $2.05 to $2.10 will need to hold to sustain the upward trend.

Meanwhile, competing XRP ETFs from Grayscale, Franklin Templeton, and others have seen continued inflows, indicating strong demand for regulated XRP exposure. These products are consolidating market share and building liquidity, despite the absence of a WisdomTree offering according to reports. This dynamic suggests that while WisdomTree's exit is significant, it has not fundamentally altered the competitive landscape.

What Are Analysts Watching?

Experts are closely monitoring two key developments: the resolution of the SEC v. Ripple Labs case and the approval status of spot Bitcoin ETFs. A favorable court ruling on XRP could remove the primary regulatory barrier for spot ETFs. Similarly, approval of a spot Bitcoin ETF would set a precedent that could influence the SEC's approach to other crypto ETFs.

Analysts also note that WisdomTree's decision may reflect strategic considerations beyond regulatory hurdles. Some suggest the firm is anticipating the entry of larger asset managers like BlackRock into the XRP ETF space. If larger firms enter the market, they could dominate the product landscape, making it more challenging for smaller players to compete.

The broader implications for digital asset markets remain unclear. While the withdrawal of WisdomTree's application signals a setback, it also highlights the evolving nature of crypto regulation and the adaptive strategies of asset managers. Investors will need to monitor regulatory and legal developments closely, as they will shape the future of crypto ETFs and investor access to digital assets.