Bitwise Files for Spot XRP ETF Amid Ripple Court Tension

Crypto-native asset managers are seeking spot XRP ETF approval at the same time the SEC is appealing the Ripple decision, setting the stage for an epic legal showdown that is bound to produce lasting ramifications for the broader crypto industry.

What’s the Scoop?

• Document Deluge: On Monday, entity filings for the “Bitwise XRP ETF” were submitted to the State of Delaware. Today, Bitwise filed an S-1 registration form for the instrument with the Securities and Exchange Commission (SEC). Canary Capital, a new crypto-focused investment firm led by former Valkyrie CIO Steven McClurg, is also reported as making progress towards filing for a spot XRP ETF.
• Opportunistic Timing: The SEC had until October 7 – next Monday – to decide whether it would challenge the July 2023 ruling by U.S. District Judge Analisa Torres in SEC v. Ripple, which found that digital assets themselves are not inherently securities, and that the specific context of a transaction must be considered when determining if an investment contract was offered.
• Appellant Attempt: Shortly after receiving spot XRP ETF filings today, the SEC filed its own paperwork: a notice to appeal the Ripple decision with the U.S. Second Circuit Court of Appeals.

Bankless Take:

While many in the crypto industry expected the SEC to challenge a seemingly unfavorable Ripple ruling, this appeal appears to contradict revisions made just two weeks ago to the SEC's Binance complaint, in which the agency clarified that its usage of the term "crypto asset security" was a "shorthand" meant to encompass the entire set of contracts, expectations, and understandings underlying the sale of crypto assets; this distinction upheld the rationale applied in SEC v. Ripple.